OmniCare of Michigan to Become DMC Subsidiary, Says United American Healthcare

Apr 03, 2001, 01:00 ET from United American Healthcare Corporation

    DETROIT, April 3 /PRNewswire/ -- OmniCare Health Plan of Michigan (Omni-
 Care-MI) and The Detroit Medical Center (DMC) jointly announced today that
 OmniCare-MI will become a wholly owned subsidiary of DMC, United American
 Healthcare Corporation Chairman William C. Brooks and President and CEO
 Gregory H. Moses, Jr. have reported.
     The consolidation culminates talks initiated among United American
 Healthcare, DMC and OmniCare-MI two years ago and builds upon the strategic
 alliance they formed last May.  The parties have signed an agreement to
 develop and accomplish the consolidation plan.  The consolidation is subject
 to execution of definitive contracts and state regulatory approval.
     United American Healthcare (OTC Bulletin Board:   UAHC) is a full-service
 health care management company.  It administers OmniCare of Tennessee, of
 which it owns 75 percent, OmniCare-MI and County Care, a program in Wayne
 County.
     DMC is the largest health care provider in southeast Michigan.  It
 operates seven hospitals, two nursing centers, and more than 100 primary care
 practices throughout the region.  It has approximately 3,000 affiliated
 physicians and serves as the teaching and clinical research site for Wayne
 State University.
     OmniCare-MI pioneered the field of managed care in Michigan.  With 32,000
 commercial members and 67,000 Medicaid members, it is one of the largest HMOs
 in southeast Michigan to serve both commercial and Medicaid members.  It was
 the first HMO in the state to become federally qualified and the first HMO in
 the country to structure itself on what is now called the network model, to
 capitate services by affiliated physicians, and to create and implement a
 capitated mental health system.  Many of its innovations have since been
 adopted by the industry.
     The agreement is good news for OmniCare's commercial members and for the
 region's Medicaid population, which has seen a shrinking number of health care
 plans willing to serve Medicaid patients, Brooks and Moses said.  "It
 strengthens OmniCare's financial base, ensures its stability and viability,
 enables greater penetration of the commercial market and expands its provider
 network."
     In recent years, United American Healthcare has funded OmniCare-MI to
 enable the HMO to meet minimum statutory requirements for net worth and
 working capital.  It funded unsecured loans to OmniCare-MI of $7.7 million in
 fiscal 2000 and $4.6 million in fiscal 1998, evidenced by surplus notes.
 Impairment losses on such notes resulted in bad debt expense of $3.1 million
 and $2.3 million for the years ended June 30, 2000 and 1998, respectively.  In
 addition, during fiscal 1999 United American Healthcare forgave $1.3 million
 in management fees owed by OmniCare-MI to enable the HMO to meet its minimum
 statutory requirements for net worth and working capital.
     It is expected that as a result of the consolidation DMC would assume
 financial responsibility for OmniCare-MI and provide an immediate correction
 of OmniCare-MI's current capital deficiencies, and United American Healthcare
 would forgive, or convert to a surplus note, $3.7 million (net of a previously
 recorded reserve) owed by OmniCare-MI to United American Healthcare at
 December 31, 2000 for accrued management fees and a previous advance provided
 to OmniCare-MI.  For United American Healthcare, such action could result in
 bad debt expense up to $3.7 million this fiscal year.
     "We consider the consolidation an excellent culmination of the progress we
 have made turning OmniCare-MI around, and validation of our long-term plans
 for that company.  We look forward to working with DMC on consummating the
 consolidation on a timely basis while continuing to administer OmniCare-MI,"
 Moses and Brooks said.
 
     This news release contains forward looking statements.  Such statements as
 made in the text of this news release that state the Company's management's
 intentions, hopes, beliefs, expectations or predictions of the future are
 forward-looking statements.  It is important to note that the Company's actual
 results could differ materially from those projected in such forward-looking
 statements.  Additional information concerning factors that could cause actual
 results to differ materially from those in the forward looking statements is
 contained from time to time in the company's SEC filings.
 
 

SOURCE United American Healthcare Corporation
    DETROIT, April 3 /PRNewswire/ -- OmniCare Health Plan of Michigan (Omni-
 Care-MI) and The Detroit Medical Center (DMC) jointly announced today that
 OmniCare-MI will become a wholly owned subsidiary of DMC, United American
 Healthcare Corporation Chairman William C. Brooks and President and CEO
 Gregory H. Moses, Jr. have reported.
     The consolidation culminates talks initiated among United American
 Healthcare, DMC and OmniCare-MI two years ago and builds upon the strategic
 alliance they formed last May.  The parties have signed an agreement to
 develop and accomplish the consolidation plan.  The consolidation is subject
 to execution of definitive contracts and state regulatory approval.
     United American Healthcare (OTC Bulletin Board:   UAHC) is a full-service
 health care management company.  It administers OmniCare of Tennessee, of
 which it owns 75 percent, OmniCare-MI and County Care, a program in Wayne
 County.
     DMC is the largest health care provider in southeast Michigan.  It
 operates seven hospitals, two nursing centers, and more than 100 primary care
 practices throughout the region.  It has approximately 3,000 affiliated
 physicians and serves as the teaching and clinical research site for Wayne
 State University.
     OmniCare-MI pioneered the field of managed care in Michigan.  With 32,000
 commercial members and 67,000 Medicaid members, it is one of the largest HMOs
 in southeast Michigan to serve both commercial and Medicaid members.  It was
 the first HMO in the state to become federally qualified and the first HMO in
 the country to structure itself on what is now called the network model, to
 capitate services by affiliated physicians, and to create and implement a
 capitated mental health system.  Many of its innovations have since been
 adopted by the industry.
     The agreement is good news for OmniCare's commercial members and for the
 region's Medicaid population, which has seen a shrinking number of health care
 plans willing to serve Medicaid patients, Brooks and Moses said.  "It
 strengthens OmniCare's financial base, ensures its stability and viability,
 enables greater penetration of the commercial market and expands its provider
 network."
     In recent years, United American Healthcare has funded OmniCare-MI to
 enable the HMO to meet minimum statutory requirements for net worth and
 working capital.  It funded unsecured loans to OmniCare-MI of $7.7 million in
 fiscal 2000 and $4.6 million in fiscal 1998, evidenced by surplus notes.
 Impairment losses on such notes resulted in bad debt expense of $3.1 million
 and $2.3 million for the years ended June 30, 2000 and 1998, respectively.  In
 addition, during fiscal 1999 United American Healthcare forgave $1.3 million
 in management fees owed by OmniCare-MI to enable the HMO to meet its minimum
 statutory requirements for net worth and working capital.
     It is expected that as a result of the consolidation DMC would assume
 financial responsibility for OmniCare-MI and provide an immediate correction
 of OmniCare-MI's current capital deficiencies, and United American Healthcare
 would forgive, or convert to a surplus note, $3.7 million (net of a previously
 recorded reserve) owed by OmniCare-MI to United American Healthcare at
 December 31, 2000 for accrued management fees and a previous advance provided
 to OmniCare-MI.  For United American Healthcare, such action could result in
 bad debt expense up to $3.7 million this fiscal year.
     "We consider the consolidation an excellent culmination of the progress we
 have made turning OmniCare-MI around, and validation of our long-term plans
 for that company.  We look forward to working with DMC on consummating the
 consolidation on a timely basis while continuing to administer OmniCare-MI,"
 Moses and Brooks said.
 
     This news release contains forward looking statements.  Such statements as
 made in the text of this news release that state the Company's management's
 intentions, hopes, beliefs, expectations or predictions of the future are
 forward-looking statements.  It is important to note that the Company's actual
 results could differ materially from those projected in such forward-looking
 statements.  Additional information concerning factors that could cause actual
 results to differ materially from those in the forward looking statements is
 contained from time to time in the company's SEC filings.
 
 SOURCE  United American Healthcare Corporation