SOMERSET, N.J., Nov. 3 /PRNewswire/ -- US Servis, Inc. (Nasdaq: USRV)
today announced a full settlement of the litigation and all matters of dispute
between them and MetroPlus Health Plan, a division of New York City Health and
Hospitals Corporation (MetroPlus/HHC).
As part of the settlement, MetroPlus/HHC will release $3,132,118 for the
third party administrative services provided by US Servis through September
30, 1997. In addition, US Servis will receive payments of $2,237,500 for
services to be rendered from October 1, 1997 through the end of the contract.
As provided in the contract, MetroPlus/HHC has elected to terminate the
contract as of February 28, 1998. The settlement agreement stipulates that
all other claims in the lawsuit will be dismissed.
Simultaneously, with the resolution of the dispute with MetroPlus/HHC, US
Servis settled the case brought against it by VertiHealth, its subcontractor
for the MetroPlus/HHC contract.
US Servis stated that the MetroPlus/HHC settlement would not have a
material effect on its income statement for the second quarter ended
September 30, 1997. The settlement will however have a material beneficial
effect on the Company's balance sheet in that MetroPlus/HHC has withheld
approximately $3.5 million in payments to US Servis during the pendency of the
litigation.
Graham O. King, Chairman and Chief Executive Officer of US Servis, said,
"We are pleased to conclude what has been a difficult relationship with an
agreement that is satisfactory to both parties. While the loss of any
customer is disappointing, the outcome of the out of court settlement of our
lawsuit with MetroPlus/HHC is in the best interests of US Servis. The Company
can proceed to develop its business from a strong financial base and eliminate
a major distraction which will allow management to dedicate all their efforts
and resources to the continued improvement of the Company's operating and
financial performance."
Mr. King went on to say that, "We are proud of the progress we have made
over the past 18 months in key areas such as customer satisfaction, business
development and operational efficiencies - all of which have resulted in the
Company's best financial results since the October, 1994 restructuring. A
great deal has been accomplished that has established a strong foundation upon
which we will continue to build:
1. The Company has now completed the transition from principally a
provider of clinical and physician turnkey information systems to that
of a management services company. Today we provide billing, accounts
receivable management and other information management services to
hospitals and physician delivery systems.
2. The Company's Physician Services Division has made significant
progress. New contracts were closed that when fully implemented will
provide approximately $6.2 million of incremental annual revenues.
These new contracts include (a) separate agreements to provide
business management services to the Medical Services Organizations
(MSOs) associated with the Columbia HealthOne System in Denver, CO and
the North General Health System in New York City, NY; (b) an agreement
with University Physician Associates, the Faculty Practice Plan
associated with the University of Medicine and Dentistry of New Jersey
to develop and manage a central business office; and recently (c) an
agreement to provide billing and accounts receivable management
services to the Department of Radiology of a major New York City
university. In addition, the Company received a two year contract
extension, valued at approximately $1.3 million per year, from the
Mount Sinai Medical Group in Elmhurst, NY.
3. Another key accomplishment on the physician side of our business was
the formation of a Strategic Alliance with IDX Systems Corporation.
IDX systems Corporation (IDX) is a leading provider of healthcare
information systems to medical group practices, physician delivery
systems and faculty practice plans. IDX software products are
installed in almost 80% of the faculty practice plans in the US and in
more than 1000 client sites nationwide. Under the terms of a
strategic alliance agreement executed in December 1996, the Company
and IDX will provide the physician market with a "total solution"
consisting of IDX providing state-of-the-art information systems, and
US Servis providing business office outsourcing services and
appropriate consulting, implementation and support services.
Going forward a great deal of our resources will be focused on
growing our physician services business. Management believes that the
IDX Strategic Alliance will enhance the Company's product offerings
and provide the Company with the opportunity to become involved in new
sales opportunities that may not have been otherwise possible.
4. The Company was also successful in obtaining new and expanded
contracts in our Hospital Services Division, that when fully
implemented will provide approximately $2.5 million of incremental
annual revenues. These contracts include (a) agreements to take
responsibility for the outpatient billing and accounts receivable
management activities at two separate health care delivery systems:
the Jersey City Medical Center, located in Jersey City, NJ and the
North General Hospital located in New York City, NY, (b) an agreement
with the Hospital for Special Surgery in New York City to extend the
term of the existing hospital outpatient business management services
agreement and provide outsourced inpatient billing and accounts
receivable management services; and, in addition, the Company
received a two year contract extension, valued at approximately
1 million per year, from the Beth Israel Medical Center in New York
City, NY.
5. On the operations and sales side of our business, a series of actions
have been implemented over the past ten months that will significantly
reduce operating expenses. These actions will result in a reduction
of on-going operating expenses estimated to be greater than $2.5
million per year.
Servicing approximately 2,000 physicians and six (6) integrated delivery
systems, US Servis is a leading provider of outsourcing services to physician
delivery systems and hospital business offices. The Company currently assumes
management and operational responsibility for client activities associated
with financial management, reimbursement management, patient services and
information systems.
Except for historical information contained herein, the matters set forth
in this news release are forward-looking statements that involve certain risks
and uncertainties that could cause actual results to differ materially from
those in the forward-looking statements. Potential risks and uncertainties
include such factors as the failure of US Servis and/or MetroPlus/New York
Health & Hospital Corporation to perform under the Settlement Agreement; time
and expense to sign and implement new contracts; changes in the anticipated
value of the contracts due to adverse factors impacting customer revenues,
such as reduction in volume or rate changes from payers such as Medicaid or
Medicare and loss of additional customers. Investors are also directed to
consider other risks and uncertainties discussed in documents filed by the
company with the Securities and Exchange Commission.
SOURCE US Servis, Inc.
CO: US Servis, Inc.; MetroPlus Health Plan; New York City Health and
Hospitals Corporation
ST: New Jersey, New York
IN: HEA
SU:
11/03/97 11:26 EST prnewswire.com
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