HEALTH CARE BUSINESS: HOSPITALS, HMOS AND ALL THE REST

      In the long run, 1997 will likely be remembered as the year
 when the breaks were slammed on the for-profit health care train. 
 From the spectacular crash of Columbia/HCA Healthcare Corp. to
 the continued problems of managed care golden-child Oxford Health
 Plans, the mantra that for-profit health care will show the way
 has been severely tested.  The big question now is "what's next?"
 What began in March with the investigation of one Columbia
 facility in El Paso, TX, quickly mushroomed into the largest
 federal Medicare fraud investigation ever.  The casualties
 included Columbia's hard-charging chair and CEO Rick Scott, the
 affection of Wall Street, the company's name and national
 branding campaign, its Pac-man-like hospital acquisition
 practices and, eventually, its home care and Value Health units
 and up to one-third of its hospitals.  
      OTHER PLAYERS
      Despite Columbia's sudden loss of interest in buying up
 community hospitals, the pace of hospital acquisitions and
 mergers did not slow noticeably in 1997.  Among those tying the
 knot, Dallas' Harris Methodist Health System and Presbyterian
 Healthcare System, King of Prussia, PA-based Universal Health,
 which signed up Washington, DC's George Washington University
 Hospital, the widely watched merger between New York's Long
 Island Jewish Medical Center and North Shore Health System, which
 got the go-ahead despite anti-trust concerns and the University
 of California-San Francisco and Stanford University both gave the
 final go-ahead to their hospitals' controversial merger. 
 However, New York City Mayor Rudy Giuliani's (R) plan to turn the
 city's public hospitals over to private operators fell apart when
 the state Supreme Court ruled that he didn't have the power to
 make the transfer, and the Vatican flexed its muscle in deals
 involving Catholic health care institutions, first nixing a deal
 between St. Peter's Medical Center and the Robert Wood Johnson
 University Hospital, and then  threatening to derail a deal
 between Tenet Healthcare Corp. and St. Louis University Hospital.
      MANAGED CARE
      Managed care also took it on the chin in 1997.  Oxford
 Health Plans suffered major losses on Wall Street after news that
 problems with its computer system had prevented it from getting
 an accurate picture of just how much in claims it was liable for. 
 Problems at Oxford -- which had been the darling of the managed
 care industry for its claims that it could offer quality and
 choice while still controlling costs -- reverberated across the
 industry, as other major players such as Aetna saw their shares
 tumble.  As health care costs and prescription drug usage
 continue to rise, managed care companies will face an
 increasingly difficult time turning a profit while holding the
 line on costs.  Many analysts predicted costs will rise the
 coming year, despite the best efforts of managed care.  One
 analyst summed it up by saying, "The feeling I've got is the
 bloom is off the rose on the HMO business."
      BLUES FOR THE BLUES
      The nation's Blue Cross plans continued to struggle to make
 themselves more competitive.  The fireworks flew over Blue Cross
 & Blue Shield of Ohio's plans to sell itself to Columbia, and
 even though the deal was officially rejected by Ohio regulators
 in March, the fallout continued throughout the year as the former
 Ohio Blue was stripped of its Blue Cross membership.  Blue Cross
 and Blue Shield of Massachusetts saw a bruising year that
 included the continued hemorrhaging of its Medex Medigap plan,
 several lost contracts and a battle with the state's hospitals
 over reimbursement rates.  While the merger of the Maryland and
 Washington, DC, Blues continues on schedule, the deals between
 Blue Cross and Blue Shield of New Jersey and Blue Cross Blue
 Shield of Delaware and between the New Jersey Blues and Anthem
 Inc. were called off because of regulatory opposition.
      A YEAR TO FORGET
      1997 also wasn't such a great year for the American Medical
 Association, which became embroiled in a scandal over a failed
 endorsement deal with the Sunbeam Corp.  While AMA Executive Vice
 President Dr. John Seward said, "The AMA apologizes for creating
 a public doubt about our motives. ... We take full responsibility
 for actions on our part that may have eroded our credibility,"
 the apology was apparently too little, too late, and by the AMA's
 December meeting Seward was out of a job.  With the battle over
 managed care regulation heating up, the Health Insurance
 Association of America also saw a shake-up as it was announced
 that longtime congressional health committee aide Charles
 ("Chip") Kahn III has been named chief operating officer and
 eventual replacement for HIAA President Bill Gradison.  The
 rapidly growing home care industry came under fire as a series of
 reports and audits found widespread fraud and waste within the
 Medicare home health system, prompting calls for reform in 1998. 
 From reforming home care to rethinking the supremacy of for-
 profits -- while satisfying consumers and keeping costs down --
 it's clear that policymakers and the industry will have a busy
 year in 1998 (Miller, American Health Line, 12/23).