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The Indigent is Us.

SOMETIMES IT TAKES A WHILE for the truth to sink in. The news last week that the University of Arkansas for Medical Sciences and St. Vincent Infirmary Medical Center had, in effect, written off seven-digit chunks of receivables from QCA Health Plan Inc. was like that.

That UAMS and, St. Vincent have been losing money is old news. But I tend to think of those bad debts they've been writing off as being the result of caring for indigent people or Medicaid and Medicare patients, for whom reimbursements were slashed to balance the. federal government's budget.

Instead, as senior editor Michael Whiteley reported, some of that bad debt was attributable to folks like us--employees. (and their employers) who have been paying significant premiums to QCA, the state's third-largest HMO. Just like indigent patients, supposedly insured QCA customers had no one to pay their hospital bills.

Technically, neither UAMS nor St. Vincent wrote off the debt from QCA. St. Vincent traded $3 million in QCA receivables for an equal amount of subordinated debt that could (but probably won't.) be exchanged for equity in QCA. UAMS exchanged $1 million it was owed for ownership of 11.59 percent of the HMO.

Unfortunately for UAMS, outside auditors from Deloitte & Touche didn't think the investment was worth $1 million. In fact, they thought it was worthless and reduced the value of the investment to zero, adding to the hospital's $9.6 million loss last year.

It is not surprising that St. Vincent preferred what CFO Rick Canady described as a "second lien" that may never be paid back rather than an equity position that is already worthless. Wouldn't you?

HMOs are losing money, but doctors in Arkansas are being paid more than the national average. According to Whiteley's report, Arkansas Blue Cross Blue Shield -- the state's dominant health insurer -- routinely pays doctors between 105 percent and 139 percent of the national average paid by private insurance for various procedures.

That's surprising since salaries in Arkansas are generally well below the national average. I'd like to meet the negotiator who managed to wrest such favorable terms from Blue Cross Blue Shield.

ABCBS, it should be noted, has managed to make money despite its high reimbursement rates. I don't have enough information to say whether the premiums charged by ABCBS and other insurers are comparable; I can only assume that competition has kept them so. But the competition is rapidly thinning out, especially in the HMO business.

Healthsource of Arkansas Inc., Cigna's HMO subsidiary, is giving up. By the end of the year, it will be out of the state completely and some other insurance company will have to pick up its nearly 15,000 members. Healthsource officials told state insurance regulators that the company is leaving because of the high rates it has had to pay providers (presumably including doctors).

Meanwhile, Healthlink HMO Inc., a subsidiary of Missouri Blue Cross and Blue Shield, is also suspending its two-year-old plan to start up an HMO operation in Arkansas because it can't sign up hospitals to serve its members.

Healthlink would have funneled patients to St. Vincent by "leasing" the NovaSys network of providers, which is partially owned by St. Vincent. But the lease has been canceled. St. Vincent, you'll recall, now has a $3 million stake in a competing HMO.

The news that Six Bridges Bar & Grill in the River Market District has been sold and will henceforth be known as Sticky Fingerz Rock 'n' Roll Chicken Shack seems to be more evidence of the, crassness that has become acceptable in our culture.

As true rock 'n' roll fans know, Sticky Fingers was the name of an album by the Rolling Stones. The album cover was cleverly designed and sexually suggestive: the fly of a pair of blue leans that could actually be unzipped. I think that's enough about that.

When I returned to Little Rock last year after 10 years in Nashville, Tenn., I was disappointed to find that the banter by drive-time radio personalities is far more sexually suggestive (and even explicit) here. Then a restaurant called Chit's opened in the River Market, and almost everything on the menu (if you can decipher it) includes some juvenile word play on a sound-alike profanity. The fried chicken tenders are delicious, but patronizing the place makes me feel like I'm endorsing the concept.

Hooters is the only successful restaurant chain with a suggestive name I can think of, and I understand it wasn't a big hit in Little Rock. I'm no marketing genius, but I can't figure out what was wrong with the name Six Bridges. I certainly never felt low-class when I ate there.

Gwen Moritz is editor of Arkansas Business.
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Publication:Arkansas Business
Article Type:Brief Article
Geographic Code:1U7AR
Date:Jun 12, 2000
Previous Article:A Just Ruling.
Next Article:Lip Service Not Enough.

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