<PAGE> 1
FORM 10-QSB
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________to______________.
COMMISSION FILE NUMBER 33-94826-NY
---------------------------
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
(Name of small business issuer as specified in its charter)
New Jersey 22-3273637
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
<TABLE>
<S> <C>
Princeton Pike Corporate Center, 1009 Lenox Drive, Lawrenceville, NJ 08648
(Address of principal executive offices) (Zip Code)
</TABLE>
Issuer's telephone number : (609)-896-1233
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date : As of August 5, 1996, there
were 3,511 shares of Common Stock outstanding.
Transitional Small Business Disclosure Format (Check one): Yes No X
----- -----
<PAGE> 2
INDEX TO FORM 10-QSB
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
<TABLE>
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Balance Sheets as of June 30, 1996 and December 31, 1995 3
Statements of Operations for the Three and Six Months Ended
June 30, 1996 and 1995 4
Statements of Shareholders' Equity for the Six Months Ended
June 30, 1996 and the Year Ended December 31, 1995 5
Statements of Cash Flows for the Six Months Ended
June 30, 1996 and 1995 6
Notes to Financial Statements 7
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II - OTHER INFORMATION
ITEM 6. Reports on Form 8-K 11
Exhibits 12
Signatures 13
</TABLE>
2
<PAGE> 3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
- ---------------------------------------------------------------------------------------------------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents $ 5,716,668 $ 5,308,465
Short-term investments 3,933,437 3,980,627
Working capital advance 1,723,085 23,723
Prepaid and other assets 146,651 228,627
-------------- --------------
TOTAL CURRENT ASSETS 11,519,841 9,541,442
Investments 558,625 565,723
Furniture and equipment, net 1,637,836 1,757,018
Deferred offering costs - 450,000
Other assets 50,000 50,000
-------------- --------------
TOTAL ASSETS $ 13,766,302 $ 12,364,183
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable $ 177,676 $ 255,159
Accrued expenses 1,117,445 576,696
Medical costs payable 162,227 1,862
Third party payables 160,619 -
Other liabilities 81,615 15,433
-------------- --------------
TOTAL LIABILITIES 1,699,582 849,150
-------------- --------------
SHAREHOLDERS' EQUITY
Common Stock, subject to redemption
(no par; 20,000 authorized; 3,511
and 3,515 issued and outstanding) 17,555,000 17,575,000
Common stock subscribed (1,087 shares) 5,979,850 -
Paid in capital 39,489 24,838
Net unrealized gains on investments 3,577 21,645
Retained deficit (11,511,196) (6,106,450)
-------------- --------------
TOTAL SHAREHOLDERS' EQUITY 12,066,720 11,515,033
-------------- --------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 13,766,302 $ 12,364,183
============== ==============
</TABLE>
See accompanying notes.
3
<PAGE> 4
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE THREE FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED MONTHS ENDED MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995 JUNE 30, 1996 JUNE 30,1995
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
REVENUE
Premiums earned $ 235,393 $ - $ 328,549 $ -
Interest income, net 126,084 190,932 253,361 388,963
Other revenue 12,742 - 13,138 -
------------- --------------- ---------------- ----------------
TOTAL REVENUE 374,219 190,932 595,048 388,963
------------- --------------- ---------------- ----------------
EXPENSES
Medical costs 189,846 - 269,409 -
Professional services 976,115 616,411 2,089,064 994,764
Compensation and benefits 854,335 335,941 1,743,522 535,106
General and administrative 532,275 30,485 1,100,143 362,246
Insurance 48,378 - 97,656 6,004
------------- --------------- ---------------- ----------------
TOTAL EXPENSES INCURRED 2,600,949 982,837 5,299,794 1,898,120
------------- --------------- ---------------- ----------------
NET LOSS $ (2,226,730) (791,905) (4,704,746) $ (1,509,157)
============= =============== ================ ================
Net loss per common share $ (506) $ (223) $ (1,188) $ (425)
- ---------------------------------------=============------===============----================----================
</TABLE>
See accompanying notes.
4
<PAGE> 5
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
NET TOTAL
COMMON STOCK PAID IN UNREALIZED GAINS ACCUMULATED SHAREHOLDERS'
COMMON STOCK SUBSCRIBED CAPITAL ON INVESTMENTS DEFICIT EQUITY
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, $ 17,750,000 $ -0- $ -0- $ -0- $ (1,440,338) $ 16,309,662
1994
Common stock redeemed
(35 shares) (175,000) 24,838 (150,162)
Change in net unrealized
gains 21,645 21,645
Net loss (4,666,112) (4,666,112)
--------------- -------------- -------------- ------------- ----------------- -----------------
Balance at December 31,
1995 17,575,000 -0- 24,838 21,645 (6,106,450) 11,515,033
=============== ============== ============== ============= ================= =================
Common stock subscribed, 5,979,850 (700,000) 5,279,850
net
Common stock redeemed (20,000) 14,651 (5,349)
(4 shares)
Change in net unrealized
gains (18,068) (18,068)
Net loss (4,704,746) (4,704,746)
--------------- -------------- -------------- ------------- ----------------- -----------------
Balance at June 30, 1996
(unaudited) $ 17,555,000 $ 5,979,850 $ 39,489 $ 3,577 $ (11,511,196) $ 12,066,720
=============== =============== =============== ============= ================= =================
</TABLE>
See accompanying notes.
5
<PAGE> 6
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
STATEMENTS OF CASH FLOWS
(UNAUDITED)
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<CAPTION>
FOR THE SIX FOR THE SIX
MONTHS ENDED MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
- ----------------------------------------------------------------------------------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES :
Net Loss $ (4,704,746) $ (1,509,157)
Adjustment to reconcile net loss to net cash used for
operating activities :
Depreciation and amortization 283,112 12,645
Increase in working capital advance (1,699,362) (589,046)
Decrease (increase) in prepaid and other assets 81,976 (188,967)
Increase (decrease) in accounts payable (77,483) 105,405
Increase in accrued expenses 540,749 -
Increase in medical costs payable 160,365 -
Increase in third party payables 160,619
Increase in other liabilities 66,182 -
---------------- -------------------
NET CASH USED IN OPERATING ACTIVITIES (5,188,588) (2,169,120)
---------------- -------------------
CASH FLOWS FROM INVESTING ACTIVITIES :
Purchase of equipment (127,710) (252,103)
Proceeds from investments matured 6,373,758
---------------- -------------------
NET CASH PROVIDED (USED) IN INVESTING ACTIVITIES (127,710) 6,121,655
---------------- -------------------
CASH FLOWS FROM FINANCING ACTIVITIES :
Common stock subscribed, net of offering costs 5,729,850 -
Redemption of common stock (5,349) (35,000)
---------------- -------------------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,724,501 (35,000)
---------------- -------------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 408,203 3,917,535
Cash and cash equivalents, beginning of period 5,308,465 3,824,277
---------------- -------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 5,716,668 $ 7,741,812
================ ===================
</TABLE>
See accompanying notes.
6
<PAGE> 7
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
NOTES TO FINANCIAL STATEMENTS
1. UNAUDITED FINANCIAL STATEMENTS
The financial information for the six and three months ended June 30, 1996 and
1995 included herein is unaudited. Such information includes all adjustments,
consisting of a normal and recurring nature, which in the opinion of
management, are necessary for a fair presentation of the Company's Balance
Sheets, Statements of Operations, Statements of Changes in Shareholders' Equity
and Cash Flows in accordance with generally accepted accounting principles.
Such information should be read in conjunction with Management's Discussion and
Analysis and the Notes to Financial Statements Incorporated by reference to the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1995.
2. COMMON STOCK SUBSCRIBED
Common Stock Subscribed represents shares sold as part of the Company's second
offering for which both a subscription agreement and cash have been received as
of June 30, 1996. These shares will be issued upon the expiration of the
offering period. For the three and six months ended June 30, 1996, the
calculation for "Net Loss per Common Share" includes the weighted average
number of shares subscribed through the second offering.
3. ADMINISTRATIVE SERVICE ONLY ("ASO") CONTRACTS
Self-insured contract activity represents contracts for which the various
employers retain all health care service risks, while the Plan assumes
administrative risk. The Plan does not reflect payment of ASO claims in its
Statement of Operations. Administrative service fees relating to this business
are recognized in other income in the period in which services are rendered.
7
<PAGE> 8
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS
GENERAL
The Company received a Certificate of Authority ("COA") to operate as a Health
Maintenance Organization ("HMO") in five counties of New Jersey (Bergen, Essex,
Hudson, Passaic and Union) on August 28, 1995. On January 29, 1996, an
amendment to the Company's COA was approved, allowing it to operate in the
remaining sixteen (16) counties of New Jersey and making the Company a
state-wide HMO.
The Company's products provide for comprehensive medical coverage in exchange
for a prepaid fixed monthly premium in the small (less than 50 employees) and
large employer business markets in New Jersey.
The Company's goal during the first half of the year has been membership
growth. In support of that goal, the Company launched their advertising
campaign in the latter part of the first quarter. The advertising campaign
consisted of print ads, bill boards and commercials in selected geographic
areas.
In addition, the Company has attempted to develop a network of general agent
brokers to distribute their products. The Company's broker program is unique in
that it is not complemented with an internal direct sales force. This
structure has served to strengthen the relationships with the broker community.
The Company has also established a Broker Advisory Panel to gain insight into
how to position the products and the Company itself so that doing business with
the Company adds value to both the member and the broker.
The rate of membership growth continues to increase. Membership at June 30,
1996 grew to 880 members, from 323 at March 31, 1996. During July, membership
almost doubled to approximately 1,500 members.
Other efforts to increase membership include evaluating unique opportunities
with strategic partners, such as private label marketing opportunities. These
opportunities will allow the Company to capitalize on strong relationships the
strategic partner has established in a community while providing a quality,
affordable product to the insured population.
The Company is developing quality healthcare programs designed to deliver
personalized healthcare and re-establish the physician / patient relationship.
One such quality healthcare program consisting of a 24 hour nurse triage system
was implemented effective August 1, 1996.
In order to increase the competitiveness of the Company's products, initiatives
have begun to strengthen the physician network in certain niche areas.
On November 9, 1995, a secondary offering of common stock was commenced for the
purpose of expanding the Company's existing network of physicians, expanding
the Company's programs and infrastructure and enhancing the Company's capital
position. The Company made available 10,000 shares of stock at a price of
$5,500 per share to physicians who practice in New Jersey. The original
offering period expired on February 9, 1996, and was extended by the Board
three additional times. The offering was officially terminated effective July
8, 1996. Through the end of the offering period, the Company received 1,154
subscription agreements, resulting in $6,347,000 of additional capital.
The Company intends to execute a Physician Participation Agreement with each
Physician shareholder from the secondary offering who meets the Company's
credentialing requirements. Prior to entering into such agreements a thorough
review of credentials and qualifications is conducted to ensure the physicians
meet minimum standards for participation in the Company's network. The Company
has begun the process of credentialing the physicians from the secondary
8
<PAGE> 9
offering. As of the date of this report, approximately 20% of the
shareholders from the secondary offering have been credentialed.
Currently, the Company has entered into participation agreements with 3,628
participating physicians. Almost 97% of the shareholders from the initial
offering have been credentialed.
While the Company's network meets the access requirements established by the
State of New Jersey, the Company will continue to contract with physicians in
those areas where a need exists.
As of August 5, 1996 the Company has contracted with seventy-eight (78) of the
state's eighty-four (84) acute care institutions, representing 93% of all New
Jersey hospitals.
During the second quarter of 1996, self-funded employer groups have begun to
access the Company's Preferred Provider Organization ("PPO") network.
Currently, the Company is servicing 48,000 lives that are part of an
organization representing over ninety (90) employers and self-funded
organizations. The 48,000 members are part of six self-funded groups. Revenue
relating to the administrative services activity for the second quarter was
$12,494. As self-funded groups begin utilizing the physician directory and
institute incentives for use of the PPO network, revenue for these services is
expected to increase. Management intends to market this program to other
employers, employer groups, third party administrators, insurance carriers,
self-funded plans, trust funds, workers compensation carriers and other payers.
OPERATIONS
Premiums and investment income were the major sources of revenue for the three
and six months ended June 30, 1996. Premium income is generated largely
through commercial HMO and Point-of-Service ("POS") business sold in the small
employer (less than 50 employees) market. The recent adoption of the proposed
regulations allowing HMOs to offer a POS product has contributed to the
increased sales. POS business represents approximately 73% of the Company's
total membership.
Investment income for the three and six months ended June 30, 1996 decreased as
compared to the same periods for the previous year. This is attributable to
lower average invested assets.
Other income represents administrative service fees relating to the self-funded
organizations which access the Company's Preferred Provider Organization
network.
The increase in medical claims cost is largely due to the increase in premiums.
Due to the lack of historical experience, the Company maintains a reserve
equivalent to a targeted loss ratio. Based upon the review of the claims to
date, management believes this reserve to be appropriate.
Operating expenses for the three and six months ended June 30, 1996 increased
as compared to the same periods for the previous year. In 1995, expenditures
and personnel acquisitions were delayed until receipt of the Certificate of
Authority in August. At June 30, 1996, operating expenses were consistent with
budgeted amounts.
No tax benefit for operating losses has been recognized in the financial
statements because the realization of such benefits would be dependent upon
achieving future operating profits, which cannot be reasonably assured.
FINANCIAL CONDITION
At June 30, 1996 total assets were $13,766,302, representing an increase of
$1,402,119 from December 31, 1995. This is largely attributable to the
proceeds received from the second offering, offset by the net loss from
operations. The working capital advance at June 30, 1996 represents funds
transferred to the management company to fund third quarter operations.
9
<PAGE> 10
The decrease in prepaid and other assets is mainly due to the amortization of
prepaid insurance. Deferred offering costs were held as an asset until the
expiration of the second offering. These costs are reflected as a reduction to
the proceeds received from the second offering at June 30, 1996.
The decrease in accounts payable represents the normal payment of monthly
expenses. Accrued expenses represent the estimates for services provided to
the organization for which no bill has been received. The largest components
of the accrued expenses relate to the marketing campaign that began late in the
first quarter, rent expense recognized for GAAP reporting purposes but not paid
and employment fees. The accounts payable balance of $177,676 represents
normal monthly activity. The Company remains current in all payments to
external vendors.
The increase in medical costs payable has increased in proportion to the
increase in premium.
Third party payables represent the payments due to providers in the PPO network
which have been funded by the self-funded employer groups.
The increase in other liabilities is largely due to an increase in a funds held
liability for the reinsurance program associated with the POS product. In New
Jersey, an HMO cannot retain any risk for the self-referred out-of-network
claims of the POS product. The Company must cede a percentage of premium to
the reinsurer for this program. As the Company incurs opt-out claims, this
liability will be reduced. Because the Company did not offer the POS product
until April, the Company has not experienced significant utilization of the
product. Based on industry statistics, utilization in the first months of a
new plan are lower than mature plans.
LIQUIDITY AND CAPITAL RESOURCES
The Company's initial offering was conducted for the purpose of raising the
capital necessary to fund its operations until the Company received its
Certificate of Authority and to fund operating deficits until such time as the
Company begins to operate at a profit. The Company's secondary offering was
intended to expand the network of physicians, expand the Company's programs and
infrastructure and to enhance the Company's equity position. If operational
deficits are greater than estimated, the net proceeds from the second offering
will be used to fund such deficits.
Due to lower than anticipated membership levels, the Company has implemented a
strategy to more appropriately align operating expenses with the membership
level. This results in a preservation of the Company's existing capital base.
The Company will focus its resources on targeted membership growth
opportunities and value added processes.
If the proceeds from the initial and second offerings are inadequate to fund
the Company's operations, the Company may need to seek additional financing
from alternative sources.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings.
ITEMS 2 THROUGH 4 ARE NOT APPLICABLE.
ITEM 5. OTHER INFORMATION
The Company's By Laws provide that the officers of the Company are elected by
the Board of Directors, while the Board is elected by all shareholders. On May
2, 1996, Dr. Raymond Kenny resigned from his position as Treasurer. At that
time, Dr. Bessie Sullivan was elected as the Treasurer.
<PAGE> 11
Subsequently, on July 8, 1996, Dr. Joseph Billotti was elected by the Board of
Directors as the Chairman of the Board. This position was previously held by
Dr. Henry D. Rosin. Dr. Rosin remains a member of the Board of Directors of
the Company. Other officer changes are as follows :
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<CAPTION>
TITLE PREVIOUS OFFICER NEWLY ELECTED OFFICER
----- ---------------- ---------------------
<S> <C> <C>
Vice Chairman Dr. Joseph Billotti, M.D. Dr. Rajendra Prasad Gupta, M.D.
Secretary Dr. Rajendra Prasad Gupta, M.D. Dr. Raymond Kenny, M.D.
</TABLE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) EXHIBITS
Reference is made to the Index of Exhibits hereinafter contained on
Page 12.
(b) REPORTS ON FORM 8-K.
No reports on Form 8-K were filed during the quarter for which this report
on Form 10-QSB is being filed.
11
<PAGE> 12
Index to Exhibits
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<CAPTION>
EXHIBIT NO. EXHIBIT
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C>
3.1 Amended and restated Certificate of Incorporation
(incorporated by reference to Exhibit 3.1 to the Registrant's
Registration Statement on Form SB-2)
3.2 Amended and restated By-Laws (incorporated by reference to
Exhibit 3.2 to the Registrant's Registration Statement on
Form SB-2)
4.1 Secondary Offering Prospectus, as approved by the Securities
Exchange Commission on November 9, 1995, detailing rights
of security holders (incorporated by reference to the
Registrant's Registration Statement on Form SB-2)
10.1 Physician Participation Agreement with Registrant, and
amendment thereto (incorporated by reference to the
Registrant's Annual Report on Form 10-KSB for the year
ended December 31, 1995)
10.2 Hospital Letter of Agreement with Registrant (incorporated
by reference to Exhibit 10.2 to the Registrant's Registration
Statement on Form SB-2)
10.3 Hospital Participation Agreement with Registrant E-1
10.4 Revised Management Agreement by and between Medical
Group Management, Inc. and the Registrant (incorporated
by reference to Exhibit 10.8 to the Registrant's Registration
Statement on Form SB-2)
10.5 Capital Management Agreement between New England Asset
Management and Registrant (incorporated by reference to
Exhibit 10.9 to the Registrant's Registration Statement on Form
SB-2)
10.6 Letter of Intent between Acordia of Southern California and
Medical Group Management, Inc. (incorporated by
reference to Exhibit 10.10 to the Registrant's Registration
Statement on Form SB-2)
10.7 Lease for Registrant's facility (incorporated by reference to
Exhibit 10.11 to the Registrant's Registration Statement on
Form SB-2)
27 Financial Data Schedule
</TABLE>
12
<PAGE> 13
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
By : JOSEPH BILLOTTI, M.D.
------------------------------
Joseph Billotti, M.D.
Chairman
ERNEST MONFILETTO MIKE W. SMITH
------------------------------ ------------------------------
Ernest Monfiletto Mike W. Smith
President and CEO Chief Financial Officer
Medical Group Management, Inc. Medical Group Management, Inc.
DATED : August 8, 1996
In accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- --------- ----
<S> <C> <C>
JOSEPH BILLOTTI, M.D. Chairman of the Board and August 8, 1996
- ----------------------------- Director
Joseph Billotti, M.D.
RAJENDRA PRASAD GUPTA, M.D. Vice Chairman and Director August 8, 1996
- -----------------------------
Rajendra Prasad Gupta, M.D.
RAYMOND KENNY, M.D. Secretary and Director August 8, 1996
- -----------------------------
Raymond Kenny, M.D.
BESSIE SULLIVAN, M.D. Treasurer and Director August 8, 1996
- -----------------------------
Bessie Sullivan, M.D.
STANLEY BLOOM, M.D. Director August 8, 1996
- -----------------------------
Stanley Bloom, M.D.
WILLIAM F. BRENNAN, D.O. Director August 8, 1996
- -----------------------------
William F. Brennan, D.O.
LEE HINDIN, M.D. Director August 8, 1996
- -----------------------------
Lee Hindin, M.D.
ALEXANDER R. HOROWITZ, M.D. Director August 8, 1996
- -----------------------------
Alexander R. Horowitz, M.D.
LOUIS KEELER, M.D. Director August 8, 1996
- -----------------------------
Louis Keeler, M.D.
LINDA KORMAN, M.D. Director August 8, 1996
- -----------------------------
Linda Korman, M.D.
</TABLE>
13
<PAGE> 14
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- --------- ----
<S> <C> <C>
STEPHEN P. LANDAUER, M.D. Director August 8, 1996
- -----------------------------
Stephen P. Landauer, M.D.
MARK LEVEY, M.D. Director August 8, 1996
- -----------------------------
Mark Levey, M.D.
MARTIN S. LEVINE, D.O. Director August 8, 1996
- -----------------------------
Martin S. Levine, D.O.
NANCY L. MUELLER, M.D. Director August 8, 1996
- -----------------------------
Nancy L. Mueller, M.D.
MARK T. OLESNICKY, M.D. Director August 8, 1996
- -----------------------------
Mark T. Olesnicky, M.D.
EMMONS G. PAINE, M.D. Director August 8, 1996
- -----------------------------
Emmons G. Paine, M.D.
FRED M. PALACE, M.D. Director August 8, 1996
- -----------------------------
Fred M. Palace, M.D.
BARRY PRYSTOWSKY, M.D. Director August 8, 1996
- -----------------------------
Barry Prystowsky, M.D.
THOMAS R.C. REUTTER, JR. D.O. Director August 8, 1996
- -----------------------------
Thomas R.C. Reutter, Jr., D.O.
HENRY D. ROSIN, M.D. Director August 8, 1996
- -----------------------------
Henry D. Rosin, M.D.
IAN SAMSON, M.D. Director August 8, 1996
- -----------------------------
Ian Samson, M.D.
DAVID L. SIROTA, D.O. Director August 8, 1996
- -----------------------------
David L. Sirota, D.O.
VINCENT J. VIVONA, D.O., J.D. Director August 8, 1996
- -----------------------------
Vincent J. Vivona, D.O., J.D.
</TABLE>
14
<PAGE> 1
HOSPITAL PARTICIPATION AGREEMENT
[LOGO]
THIS AGREEMENT, is effective on the date noted on the signature page of this
Agreement by and between Physician Healthcare Plan of New Jersey, Inc., a New
Jersey Corporation, and any of its affiliates or subsidiaries (hereinafter
collectively referred to as "PHPNJ"), and ___________________ (hereinafter
referred to as "Hospital").
WHEREAS, Hospital and PHPNJ recognize that PHPNJ has been authorized by the New
Jersey Department of Health and the New Jersey Department of Insurance to
operate a health maintenance organization (HMO) in all twenty-one (21) counties
of the State of New Jersey;
WHEREAS, Hospital recognizes that this Agreement represents the foundation for
the successful provision of health care services to Members and that mutual
cooperation, respect and communication are essential to the fulfillment of each
party's responsibilities;
WHEREAS, PHPNJ and Hospital mutually desire to enter into an Agreement whereby
Hospital shall provide, and/or arrange for the provision of, certain health
care services to Members of PHPNJ in a quality, cost-effective manner which
preserves and enhances patient dignity;
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained and other good and valuable consideration, it is mutually covenanted
and agreed by and between the parties hereto as follows:
I. DEFINITIONS
A. CHIEF MEDICAL OFFICER is a physician designated by PHPNJ to monitor quality
of care and appropriate utilization of Health Care Services delivered by
Health Care Consultants to Members. The Chief Medical Officer shall
oversee the implementation and coordination of the PHPNJ Utilization
Management and Quality Assurance Programs.
B. EMERGENCY is defined as a sudden and unexpected onset of a condition or
changes or exacerbations in existing conditions, requiring immediate
medical or surgical diagnosis or care to avoid a life-threatening situation
or serious impairment of bodily functions. An Emergency includes, but is
not limited to, heart attacks, strokes, poisonings, loss of consciousness
or respiration, hemorrhaging, severe pain and convulsions.
C. HEALTH BENEFIT PLAN includes any one of PHPNJ's lines of business including
but not limited to, prepaid health benefit plans, preferred provider
arrangements, third party administrative services, administrative services
only, managed care workers' compensation, government programs and/or other
payer arrangements.
D. HEALTH CARE CONSULTANT is a person, entity, or institution that has entered
into a Participation Agreement with PHPNJ to provide and/or arrange for
Health Care Services to Members within the scope of a license or
authorization duly issued in accordance with the laws of the State of New
Jersey.
E. HEALTH CARE SERVICES refers to all medical services that a Member is
entitled to receive and which are authorized for payment under PHPNJ's
Health Benefit Plan ("Health Benefit Plan").
F. MEDICAL NECESSITY is defined as Health Care Services required to identify
and treat an illness or injury, and which are: i) appropriate and
necessary for the diagnosis or treatment of a Member's medical condition,
illness, disease or injury; ii) appropriate with regard to standards of
PHPNJ and good medical practice as recommended and accepted by the medical
community and as adopted by the Utilization Management and Quality
Assurance Committees of PHPNJ; iii) not solely for the convenience of the
Member, Health Care Consultant, or the Member's family; and iv) the most
appropriate supply or level of service which can be safely provided to the
Member.
G. MEMBER is a person who is entitled to Health Care Services covered under
any one of PHPNJ's Health Benefit Plans.
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<PAGE> 2
II. RESPONSIBILITIES OF PHPNJ
A. MEMBER IDENTIFICATION. PHPNJ will provide to Members a means to identify
the patient as a Member of the Health Benefit Plan.
B. ELIGIBILITY AND BENEFIT VERIFICATION. For Members enrolled in PHPNJ's
prepaid Health Benefit Plan, PHPNJ shall provide a system for the
verification of Member eligibility to receive Health Care Services and for
the notification of applicable co-payments. In addition, Hospital agrees
and understands that verification of Member eligibility is not a guarantee
of payment by PHPNJ.
C. MARKETING OF HOSPITAL. PHPNJ will market Hospital to Members. Hospital
understands and agrees that PHPNJ may use its name, address, telephone
number, facsimile number, electronic mail, Internet address, and/or other
pertinent information in materials used for marketing purposes, including
but not limited to the PHPNJ Directory of Physicians, Hospitals and
Healthcare Providers.
D. POLICIES AND PROCEDURES. PHPNJ shall provide to Hospital a manual of
administrative procedures to assist Hospital in the areas of record
keeping, reporting and other administrative duties of Hospital under this
Agreement. PHPNJ Health Plan Administrators shall be made available to
assist Hospital with specific issues related to PHPNJ and/or its Members.
E. APPEALS. PHPNJ shall establish a Grievance Process for PHPNJ's prepaid
Health Benefit Plan, which will provide to Hospital a means to pursue
recourse on decisions made by PHPNJ with respect to utilization
management, quality assurance, and/or claims determinations.
F. INSURANCE. PHPNJ shall provide and maintain such policies of general and
professional liability insurance as shall be necessary to insure PHPNJ,
its directors, officers and employees against any claim or claims for
damages arising directly or indirectly from, or in connection with, the
performance or failure to perform their obligations under this Agreement.
Nothing herein shall be construed as any obligation of PHPNJ to provide
insurance for, or on behalf of, Hospital or any other Health Care
Consultant.
G. COMPLIANCE. PHPNJ shall be bound by all applicable state and federal
laws, rules and regulations.
III. RESPONSIBILITIES OF HOSPITAL
A. PROVISION OF HEALTH CARE SERVICES AND FACILITY REQUIREMENTS. Hospital, in
accordance with federal law and its licensure and consistent with accepted
standards of medical care, shall provide, or arrange for the provision of,
Health Care Services to Members. In particular, Hospital agrees that:
1. Hospital warrants that it is duly licensed by the State of New
Jersey and is in compliance with all applicable state and local
laws. In addition, Hospital warrants that it is accredited by the
Joint Commission on Accreditation of Health Care Organizations, or
accredited by the American Osteopathic Hospital Association, and is
certified to participate in the Medicare and Medicaid programs. In
the event that Hospital loses its accreditation or is subject to
disciplinary action by the Joint Commission on Accreditation of
Health Care Organizations or the American Osteopathic Hospital
Association, Hospital agrees to notify PHPNJ immediately of this
action. Hospital agrees to cooperate with PHPNJ in meeting
accreditation requirements of the National Committee for Quality
Assurance or other such organizations to which PHPNJ might apply for
accreditation.
2. Subject to the availability of beds and other resources, Hospital
agrees to provide inpatient and outpatient services customarily
provided at its facility to Members and shall not differentiate or
discriminate in the treatment of Members on the basis of race, sex,
age, religion, place of residence, health status or source of
payment.
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<PAGE> 3
3. Hospital certifies that all representations made in the PHPNJ
Hospital Survey are true and accurate;
4. Hospital shall follow and be bound by the State and Federal Laws and
regulations and the policies and procedures as established and
adopted by PHPNJ, each as amended and in effect from time to time;
5. Hospital recognizes that PHPNJ has developed, with regard to PHPNJ's
prepaid Health Benefit Plan, a system to identify and resolve Member
grievances and shall cooperate with PHPNJ in investigating and
resolving Member grievances involving Hospital.
B. MEDICAL RECORDS. Hospital shall maintain a standard medical record for
each Member and furnish such records as may be required by federal and
state laws, rules, regulations and PHPNJ's Utilization Management and
Quality Assurance Program. PHPNJ and Hospital agree that medical records
of Members shall be regarded as confidential and both parties shall
comply with all applicable federal and state laws, rules and regulations
regarding such records.
Hospital shall provide PHPNJ, or its designee, with reasonable access,
during normal business hours, to examine and duplicate medical records of
Members maintained by Hospital for the period required by federal and
state law and at any time thereafter that such access is reasonably
required in connection with a Member's health care. In the event that
PHPNJ requests that Hospital provide copies of medical records of
Members, Hospital may charge PHPNJ a fee, not to exceed twenty-five cents
($0.25) per page, for copies requested in excess of one hundred (100)
pages of Member's medical record.
C. PHYSICIAN ADMITTING PRIVILEGES. Hospital shall provide, at no additional
charge, any information requested by PHPNJ to verify the credentials of
medical staff members applying for participation in PHPNJ, subject to
written physician consent authorizing the release of such information and
the bylaws, rules and regulations of the Hospital and its Medical Staff.
Hospital shall consider for appointment to the active medical staff of
Hospital physicians who are currently participating in PHPNJ or who may
in the future apply for participation in PHPNJ. Hospital shall provide a
copy of Hospital's medical staff credentialing policies and procedures
upon submission of the PHPNJ Hospital Survey.
D. HOSPITAL BALANCE BILLING. Hospital agrees that: i) in no event,
including, but not limited to, nonpayment by PHPNJ, PHPNJ's insolvency or
breach of this Agreement, or adjustments resulting from PHPNJ's
Utilization Management Program determinations, shall Hospital bill,
charge, collect a deposit from, seek compensation, remuneration or
reimbursement from, or have any recourse against Member for Health Care
Services provided under this Agreement; however, Member shall be solely
responsible for, and Hospital shall bill Member directly for, payment for
applicable copayments, coinsurance, deductibles, non-covered services and
benefits, and for services rendered under any PHPNJ Health Benefit Plan
other than a prepaid Health Benefit Plan and for which adequate funds to
pay for such services have not been received by PHPNJ; ii) this provision
shall survive the termination of this Agreement for those Health Care
Services rendered prior to the termination of this Agreement, regardless
of the cause giving rise to termination, and shall be construed to be for
the benefit of the Members, but is not intended to apply to services
provided after this Agreement has been terminated; and iii) this
provision supersedes any oral or written contrary agreement now existing
or hereafter entered into between Hospital and Members or persons acting
on behalf insofar as such contrary agreement relates to liability for
payment for services provided under the terms and conditions of this
Agreement.
E. INSURANCE. Hospital shall procure and maintain such policies of general
and professional liability insurance as shall be necessary to insure
Hospital and its employees against any claim or claims for damages
arising by reason of personal injuries or death occasioned, directly or
indirectly, in connection with the performance of any Health Care
Services provided or arranged for by Hospital under this Agreement.
Hospital shall provide evidence of such coverage upon submission of the
PHPNJ Hospital Survey and shall notify PHPNJ immediately of any material
change to, or cancellation of, such coverage.
IV. ADMINISTRATION
A. UTILIZATION MANAGEMENT AND QUALITY ASSURANCE PROGRAMS. Hospital shall
participate in, and comply with, the Utilization Management Program,
Quality Assurance Program, policies and procedures outlined in
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<PAGE> 4
Exhibit B of this Agreement, as well as those of other PHPNJ Health
Benefit Plans, where necessary. Failure to comply with this provision
may result in denial of payment to Hospital.
B. REFERRALS AND PATIENT TRANSFER. Hospital agrees to provide Health Care
Services to Member only upon appropriate referral from Member's Primary
Care Physician, or other authorization as permitted by PHPNJ or its
designee, in accordance with the procedures for referrals established by
PHPNJ. Recognizing that decisions regarding patient transfer are made by
the Member in consultation with the attending physician, Hospital shall
make best efforts consistent with good medical practice and quality care
to transfer Member to another PHPNJ participating hospital.
C. CLAIM SUBMISSION. Hospital shall submit to the address appearing on the
Member's identification card a completed claim form which contains all of
the information requested on a standard UB92 or HCFA 1500 claim form.
Claims shall be submitted within ninety (90) days of the date of
discharge or completion of a course of treatment. Claims submitted by
Provider after ninety (90) days may be refused for payment, and amounts
billed may not be collected from Member. Complete and uncontested claims
received in a timely fashion shall be paid within thirty (30) days of
receipt. Hospital recognizes that claims may be pended for investigation
and resolution of coordination of benefits and/or other appropriate
reasons and that best efforts will be made to resolve pended claims as
expediently as possible.
D. REIMBURSEMENT. Hospital shall be paid according to the Negotiated Rate
Schedule set forth in Exhibit A of this Agreement for Health Care
Services rendered to Members. In accordance with the terms outlined in
Section III-D. of this Agreement, Hospital shall accept the Negotiated
Rates as payment in full, less any applicable copayment, coinsurance,
deductible and/or amounts received from all other sources.
E. COORDINATION OF BENEFITS. If Health Care Services provided to Member
pursuant to this Agreement are also covered by any other Health Benefit
Plan, third party liability or insurance policy, Hospital agrees to
assist in coordinating such payment. PHPNJ's obligation for payment to
Hospital shall not exceed the Negotiated Rate, less any applicable
copayment, coinsurance, deductible and/or amounts received from all other
sources.
F. NON-COVERED SERVICES. Services requested by Members which are not
covered by Member's Health Benefit Plan are payable by Member. Hospital
shall advise Member of his/her payment responsibility prior to providing
such services.
V. TERM AND TERMINATION
A. TERM. The initial term of this Agreement shall be for one year
commencing with the effective date noted on the signature page of this
Agreement. Thereafter, the term of this Agreement will be automatically
extended for one year periods unless terminated in accordance with
Section B below.
B. TERMINATION. This Agreement may be terminated by either party without
cause by written notice given at least (120) days in advance of such
termination.
This Agreement may be terminated immediately by either party in the event
of: i) Hospital's or PHPNJ's failure to meet its responsibilities and
obligations under this Agreement when such failure has not been remedied
within thirty (30) days of written notice to the defaulting party of the
alleged default; ii) loss of Comprehensive General Liability Insurance
Coverage or Professional Liability Insurance Coverage by Hospital or
PHPNJ; or iii) insolvency, bankruptcy, dissolution, loss of licensure of
Hospital or PHPNJ, loss of certification of Hospital in the Medicare or
Medicaid programs, or loss of accreditation of Hospital.
Following termination of this Agreement, if requested by PHPNJ, Hospital
shall continue to furnish Health Care Services to Members until an
orderly transfer of Members to the services of another Hospital can be
made or until completion of treatment, whichever occurs first but in no
event shall Provider be required to provide Health Care Services beyond
120 days after termination of this Agreement. Notwithstanding anything
to the contrary which may be contained in this Agreement, payment to
Hospital for Health Care Services rendered to Members during such period
shall be subject to the terms and conditions of this Agreement.
If PHPNJ and the hospital, are unable to agree on the terms of a new
contract upon the expiration of the current contract, the hospital and
PHPNJ shall continue to abide by the terms of the most current contract
for a period of four months from a severance date mutually agreed upon by
both parties, In that event, PHPNJ shall promptly notify the health care
providers with which it has contracted to provide services and provide
8/9/96
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<PAGE> 5
notification within the four-month extension period to those of its
enrollees who reside in the county in which the hospital is located or in
an adjacent county in writing as to the extension of the terms of the
most current contract, and shall in the notice to its enrollees advise
them of the options available to them with respect to their health care
coverage.
In consideration of PHPNJ providing current and future Members to
Hospital, Hospital agrees that in the event this Agreement terminates for
any reason, PHPNJ will suffer irreparable harm and injury if Hospital
attempts to, or does, communicate with PHPNJ Members in any way
concerning paid termination. Hospital expressly waives Hospital's rights
to contact PHPNJ Members in any way about the termination of this
Agreement, including the options such members may have to join other
health care plans or to switch to other providers, including Hospital, as
a result of the termination; or the fact that Hospital will no longer be
involved with the Member's health care needs. If Hospital does so
communicate to PHPNJ's Members concerning termination of this Agreement,
such activity will constitute a breach of this provision and PHPNJ may
set restraints to preclude such activity, as well as all appropriate
damages resulting from Hospital's breach. Understanding and
acknowledging the foregoing, Hospital agrees to rely exclusively upon
PHPNJ's communication to its Members concerning termination of this
Agreement and agrees not to interfere in any way with the relationship
between PHPNJ and its Members.
VI. MISCELLANEOUS
A. AMENDMENT. This Agreement may be amended or modified in writing as
mutually agreed upon by the parties. In addition, PHPNJ may modify this
Agreement upon thirty (30) days written notice to Hospital. Hospital's
failure to respond to such notice within thirty (30) days of receipt is
deemed to be acceptance of such amendment or modification; provided,
however, that if Hospital objects to such amendment or modification,
PHPNJ shall have the right to terminate this Agreement on at least thirty
(30) days advance written notice. During this notice period, the
proposed amendment or modification shall not be in effect.
B. ASSIGNMENT. Neither PHPNJ nor Hospital may assign, delegate, or transfer
this Agreement by operation of law or otherwise without the prior written
consent of the other party, except that PHPNJ may assign its rights or
delegate its duties and obligations to any entity set forth on Exhibit C
or an entity that controls, is controlled by, or that is under common
control with PHPNJ now or in the future, or which succeeds to its
business through acquisition, merger, or other corporate transaction.
C. NOTICE. Any notice required to be given pursuant to the terms and
provisions hereof shall be sent by certified mail, return receipt
requested, postage prepaid, to PHPNJ and to Hospital. Such notice shall
be in effect three days after mailing.
D. INDEPENDENT CONTRACTOR. This Agreement is not intended to create, nor
shall be construed to create, any relationship between PHPNJ and Hospital
other than that of independent entities contracting for the purpose of
effecting provisions of this Agreement. Neither party, nor any of their
representatives, shall be construed to be the agent, employer, employee
or representative of the other.
Nothing in this Agreement shall be deemed to change or alter any
relationship which exists, or which may come to exist, between Hospital
and any Member, and PHPNJ or any entity listed on Exhibit C shall have no
right to interfere with the care or treatment given or prescribed to any
Member. Hospital agrees for purposes of this section, that the
Utilization Management and Quality Assurance Programs of PHPNJ shall not
constitute "interference with the care or treatment given or prescribed
to any Member."
E. PROPRIETARY INFORMATION. Hospital recognizes that all material provided
by PHPNJ is the proprietary information of PHPNJ and Hospital shall not
disclose or release such material. In addition, Hospital shall not use,
or assist others in using, any of PHPNJ's proprietary information,
directly or indirectly, to further the business purposes of any other
health care insurer or health care delivery system.
F. INDEMNIFICATION. Either party shall indemnify and hold harmless the
other party and its employees, agents, directors, officers and affiliates
from and against any and all claims, demands, losses, damages,
liabilities, lawsuits and other proceedings, judgments and awards, and
costs and expenses (including, without limitation, reasonable attorney's
fees) arising, directly or indirectly, in whole or in part, out of or in
connection with the Hospital's performance or failure to perform under
this Agreement.
G. GOVERNING LAW. This Agreement shall be governed by the laws of the State
of New Jersey.
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<PAGE> 6
H. SEVERABILITY. In the event that any provision of this Agreement is
rendered invalid or unenforceable by any law or regulation, or declared
null and void by any court of competent jurisdiction, that part shall be
reformed, if possible, to conform to law, and if reformation is not
possible, that part shall be deleted. The remainder of the provisions of
this Agreement shall, subject to this paragraph, remain in full force and
effect.
I. PASSAGE OF NEW LAWS. In the event of the passage of any new law, rule or
regulation, which would materially affect this Agreement in any way, the
parties agree to act in good faith to address the new law, rule or
regulation and to modify this Agreement accordingly.
J. NONEXCLUSIVITY. This Agreement does not constitute an exclusive
agreement and Hospital may enter into similar agreements with any other
health care insurer, health care delivery system, or other third party
payer.
K. FORCE MAJEURE. No delay in, or failure of, performance by either party
under this Agreement will be considered to be a breach hereof if and to
the extent that such delay or failure of performance is caused by an
occurrence or occurrences beyond the reasonable control of the party
affected such as, but not limited to, major disaster, epidemic, complete
or partial destruction of facilities, riot, civil insurrection and
strikes. The foregoing will not be considered to be a waiver of any
party's obligations under this Agreement, and as soon as such occurrence
or occurrences cease, the party affected thereby will promptly fulfill
its obligations under this Agreement.
L. WAIVER. The waiver of performance of any covenant, condition or
obligation shall not be construed to be a waiver of any subsequent
covenant, condition or promise.
M. HEADINGS. The headings of the various sections of this Agreement are
inserted merely for the purpose of convenience and do not, expressly or
by implication, limit, define or extend the specific terms of the section
so designated.
PHPNJ HOSPITAL PARTICIPATION AGREEMENT
The parties acknowledge by their execution of this Agreement, that they have
read, and agree to, the entire contents of this Agreement including any
Attachments hereto. This Agreement constitutes the entire understanding of
the parties with respect to the subject matter hereof, and supersedes all
prior, oral or written, expressed or implied, agreements, understanding and
policies.
In witness thereof, the undersigned have executed this Agreement to be
effective on __________________, 19__ to be completed by PHPNJ).
<TABLE>
<S> <C>
HOSPITAL PHYSICIAN HEALTHCARE PLAN
OF NEW JERSEY, INC.
- ------------------------------------ ---------------------------------------
Signature Signature
- ------------------------------------ ---------------------------------------
Printed Name Printed Name
- ------------------------------------ ---------------------------------------
Title Title
- ------------------------------------ ---------------------------------------
Date Date
- ------------------------------------
Tax ID Number
</TABLE>
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<PAGE> 7
EXHIBIT A
NEGOTIATED RATE SCHEDULE
INPATIENT SERVICES
<TABLE>
<S> <C> <C>
MEDICAL/SURGICAL $ PER DIEM
NICU/ICU $ PER DIEM
NORMAL DELIVERY (MOTHER AND BABY) $ PER CASE
CESAREAN DELIVERY (MOTHER AND BABY) $ PER CASE
DETAINED INFANT $ PER DIEM
PSYCHIATRIC $ PER DIEM
DETOXIFICATION $ PER DIEM
PHYSICAL REHABILITATION $ PER DIEM
</TABLE>
OUTPATIENT SERVICES
<TABLE>
<S> <C>
SAME DAY SURGERY % OF CHARGES
EMERGENCY ROOM % OF CHARGES
OTHER OUTPATIENT SERVICES % OF CHARGES
</TABLE>
The Negotiated Rates specified above include all Covered Health Care Services
provided by hospital including, but not limited to, the following:
pre-admission testing, use of operating room, supplies, equipment, laboratory
services, nursing care, IV injections and solutions, all amounts associated
with services of hospital-based physicians where the hospital-based physician
is compensated for Covered Health Care Services by Hospital and all amounts
associated with requests for medical records and participation in PHPNJ's
Utilization Management and Quality Assurance Programs, except as authorized in
Section III-B of this Agreement. In no case, shall the Negotiated Rate exceed
85% of the Hospital's usual billed charges. For Medicare patients, in no case,
shall the Negotiated Rate exceed the applicable DRG reimbursement for Medicare
patients.
* Hospital must clearly identify Emergency Room visits as emergent or
non-emergent on the bill.
EXHIBIT B
UTILIZATION MANAGEMENT AND QUALITY ASSURANCE PROGRAM SUMMARY
PHPNJ shall make available to Hospital a toll free number and/or other
communication system(s) to meet the notification requirements of PHPNJ's
Utilization Management Program as outlined below. Upon notification, PHPNJ has
sole discretion in reviewing and/or certifying procedures, services and/or
inpatient admissions. PHPNJ will notify Hospital of determinations made under
its Utilization Management and Quality Assurance Programs and shall provide
Hospital with a mechanism for appealing all determinations made under the
Utilization Management and Quality Assurance Programs.
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<PAGE> 8
HOSPITAL ADMISSIONS
Hospital shall notify PHPNJ of scheduled inpatient admissions and Same
Day Surgery admissions no fewer than five (5) business days prior to the
day of admission. In the event Hospital is not aware of the admission
five (5) days prior, Hospital shall notify PHPNJ as soon as Hospital
becomes aware of the scheduled inpatient admission. In addition,
Hospital agrees to accept pre-admission testing performed outside of the
hospital, provided such tests were performed within 72 hours of the
admission.
Hospital shall notify PHPNJ of maternity and emergency admissions on the
first business day following the admission or when Hospital becomes aware
patient is a Member of PHPNJ, whichever occurs first. Such admissions
are subject to concurrent and retrospective review for determination of
Medical Necessity.
OUTPATIENT SERVICES
Hospital shall notify PHPNJ of referrals to physicians or facilities not
participating in PHPNJ and for the following services: MRI, CT Scan,
home health care, durable medical equipment, hospice care, extended care,
mental health services and physical therapy. Hospital shall notify the
PHPNJ Member's Primary Care Physician when the Member presents for
emergency care. Other services requiring prior approval may be added in
the future, at the discretion of PHPNJ.
CONCURRENT REVIEW
At the time of admission notification, PHPNJ shall assign an Estimated
Length of Stay (ELOS). An admission in excess of the initial ELOS must
be approved concurrently by PHPNJ. PHPNJ may contact Hospital for
information concerning the Member's condition and Hospital agrees to
review and cooperate with PHPNJ Utilization Management staff. Hospital
agrees to cooperate with any on-site concurrent review conducted by
PHPNJ.
EXHIBIT C
ADMINISTRATIVE POLICIES
8/9/96
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<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM BALANCE
SHEET AT JUNE 30TH, 1996 (UNAUDITED) AND THE STATEMENT OF OPERATIONS FOR THE SIX
MONTHS ENDED JUNE 30, 1996 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000948547
<NAME> PHYSICIAN HEALTHCARE PLAN OF NEW JERSEY, INC.
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 5,716,668
<SECURITIES> 3,933,437
<RECEIVABLES> 27,923
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 11,519,841
<PP&E> 2,018,529
<DEPRECIATION> 380,693
<TOTAL-ASSETS> 13,766,302
<CURRENT-LIABILITIES> 1,699,582
<BONDS> 0
17,555,000
0
<COMMON> 0
<OTHER-SE> (5,488,280)
<TOTAL-LIABILITY-AND-EQUITY> 13,766,302
<SALES> 328,549
<TOTAL-REVENUES> 595,048
<CGS> 0
<TOTAL-COSTS> 269,409
<OTHER-EXPENSES> 5,030,385
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,704,746)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,704,746)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,704,746)
<EPS-PRIMARY> (1,188)
<EPS-DILUTED> (1,188)
</TABLE>
