It was the kind of moment public relations people live for.

There was the president, yes, the U.S. President, Bill Clinton, in Los Angeles last week praising managed care giant Kaiser Permanente for helping out with health care for the country's low-income, uninsured children.

It couldn't have come at a better time. California HMOs have been taking it on the chin for months (well, years really) with bills to further regulate the industry wending their way through the state Legislature, and a newly emboldened Department of Corporations handing out fines like parking tickets.

A dose of good P.R. could, in theory, help ease the scope of constricting bills before their passage and help Kaiser distance itself from for-profit managed care companies, seen as particularly egregious by consumer advocates.

Non-profit Kaiser, California's largest managed care company, earned Clinton's kudos by committing to spend $100 million over the next five years to provide an estimated 50,000 children annually with the full HMO treatment any dues-paying enrollee would receive.

That's more than any of L.A.'s other managed care giants has done Blue Cross of California, CareAmerica Health Plans, Health Net, Maxicare Health Plans and Prudential HealthCare included.

The $100 million will go toward subsidizing premiums for children from low-income families. The subsidies are expected to cover 25 percent to 75 percent of the premium costs, depending on family income.

Kaiser CEO David Lawrence said his company's gesture was in part meant to encourage other managed care companies into similar pro bono children's work.

What has not been mentioned in the celebration over Kaiser's commitment is that the $100 million, five-year plan does not represent entirely new money. Kaiser is already required to provide a degree of free care to qualify for tax-exempt status, and already has a premium-subsidies program in place.

Kaiser spokesman Jim Anderson said he did not know how much of the $100 million is new funding and how much is merely redistribution of existing money.

That's gotta hurt

PacifiCare Health Systems Inc., parent company to L.A.'s second-largest HMO, took a major hit last week when its stock price tumbled 21 percent on news of lower-than-expected earnings.

Profits throughout the managed care industry have been low so far in 1997, but PacifiCare's are expected to be especially dismal for the second quarter.

PacifiCare's share price dropped $17.25 last Tuesday, closing at $63.75. The company had announced late Monday that second quarter earnings would be "substantially lower" than during the previous quarter. It did not give a projected earnings figure.

The company attributed the dip to poor recent performance of its FHP health plans in California, especially in the month of May. PacifiCare spent much of 1996 and early 1997 winning approval from the California Department of Corporations to acquire FHP International Inc., a deal that went through in February.

PacifiCare shares clawed their way back up above $70 before week's end, but remained downgraded from "strong buy" and "recommended" at a number of trading houses to "hold."

Childrens Hospital to grow

Childrens Hospital of Los Angeles is on the money trail, looking to raise $50 million to construct a two-story, 103,000-square-foot building that will have the only pediatric minimally invasive surgery center in the United States.

So far $24 million has been raised, including $1 million-plus pledges from the Ahmanson Foundation, Weingart Foundation, Tracinda Corp. and a $1 million pledge from Anna Murdoch, wife of media mogul Rupert Murdoch and chair of the hospital's board of regents.

According to Dr. Kathryn Anderson, the hospital's chief of surgery, 40 percent of all surgery performed will be minimally invasive within the next three years. Currently, almost no pediatric surgeries are minimally invasive.

The new center at Childrens Hospital will provide such minimally invasive procedures as gall bladder surgery, chest biopsies, closure of holes in the heart, placement of brain shunts and the fixing of bone fractures via punctures rather than incisions, Anderson said.

Virus linked to cancer

Researchers from UCLA and the Veterans Administration Medical Center in Westwood say they've identified a virus associated with a common blood cancer.

The virus, Kaposi's sarcoma herpes virus, was first identified in 1994 among people with AIDS, and was at that time linked to a form of skin cancer known as Kaposi's sarcoma, common among AIDS patients.

The new discovery identified the same virus in each of 15 patients suffering from multiple myeloma, the second-most-common form of blood cancer in the United States. The virus was not found in 16 other patients with other forms of cancer or in 10 healthy patients.

The researchers reported that the virus was not found in the cancer cells themselves, but in adjacent non-cancerous cells. That has led researchers to believe the virus causes the cancer indirectly, by causing the infected cells to somehow stimulate nearby cells to become malignant.

Ben Sullivan is a reporter for the Los Angeles Business Journal and covers the health care industry.

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