Safety-Net Centers Look to Attract Wealthier Patients

A report from the Center for Studying Health System Change finds that “safety-net providers”,hospitals, health centers and clinics that provide care for the poor,are trying to improve their financial performance by attracting insured and wealthy patients.

Orange County comes up several times in the report. The county is one of 12 communities that the center, a Washington, D.C.-based nonprofit founded by the Robert Wood Johnson Foundation, studies.

The report looked at how safety-net hospitals, health centers and free clinics are affected by a growing trend among private doctors and hospitals to cast off unprofitable patients and services.

UCI Medical Center, a teaching hospital in Orange, is among a group of safety-net providers that is “leveraging competitive advantages” through broad specialty coverage,something that tends to attract insured patients, according to the report.

The hospital has one of the only Joint Commission-accredited stroke centers in California, the report said.

Replacement hospitals being built for UCI Medical and safety-net providers in Little Rock, Ark., and Miami “are expected to be stronger competitors for privately insured patients because the facility will be more modern and more accessible to privately insured patients,” the report said.

Providers in three areas, including OC, “discussed their desire to shed their image as a ‘safety-net provider’ to appeal to a broader spectrum of patients,” according to the report.

UCI Medical decided earlier this decade to limit healthcare under the county’s medical services for the indigent program only to patients who lived within five miles of the hospital. Officials also threatened to end their contract with the program unless the burden of care was spread more evenly among other hospitals. The Board of Supervisors eventually reworked the program.

The report’s authors found that hospitals in communities with traditionally strong safety nets, such as Boston, wanted to keep their status as catering to the poor,compared to communities considered to have traditionally weak safety nets, such as OC, which are moving away from that.

Safety-net providers’ ability to maintain a balance between their mission and financial viability “has been tenuous for some time, but is becoming even more so in a marketplace that is becoming more competitive and profit-driven,” the report said.

I-Flow Court Battle

I-Flow Corp., a Lake Forest-based medical device maker, said earlier this month that it would ask a U.S. District Court judge to rule that San Diego-based Apex Medical Technologies Inc. and its president, Mark McGlothlin, infringed upon one of its patents for a medical pump.

The company said in a statement that the judge recently “interpreted the patent claims in a manner consistent with I-Flow’s position in the case.”

I-Flow alleges that Apex, which makes the Solace medical pump used to relieve pain after surgery, was developed “using I-Flow’s secret information.”

“We believe and maintain that our product does not infringe,” said Mike Marasco, a vice president for Zone Medical LLC, which distributes Solace for Apex.

Solace is different, Marasco said, because it is free of latex.

The companies have been in litigation for 14 months.

“It’s interesting that I-Flow just (now) chooses to announce that,” Marasco said.

When asked about the timing, an I-Flow spokesman said it made the announcement because the judge’s interpretation of the patent claim was material in the case.

Company Plans IPO

AutoGenomics Inc., a medical testing company just over the county line in Carlsbad, recently filed plans to raise up to $86.3 million in an initial public offering.

AutoGenomics’ main product is Infiniti, a molecular diagnostic testing system that automates genetic tests for clinical laboratories. Some of its tests include ones for sensitivity to Coumadin, a popular blood-thinning drug, and screening for human papillomavirus, a major cause of cervical cancer.

The company was described as having a “printer-type business model” by Eben Tessari on SeekingAlpha.com, a financial blog. AutoGenomics “gives away the box”,its instruments,and seeks to make money on reagents and other supplies, he said.

AutoGenomics isn’t profitable. Its Securities and Exchange Commission filing shows that it had a loss from operations of $9.7 million on sales of $1.6 million in 2007. For the first three months of 2008, AutoGenomics posted an operating loss of $3 million on sales of only $185,161.

The company said in its filing that it will compete with various “large, well-funded” companies and names some of them, such as Abbott Laboratories Inc. of suburban Chicago, Roche Diagnostics, a unit of Switzerland’s Roche SA, and Franklin Lakes, N.J.-based Becton, Dickinson