Author: Serkadis

Kaiser Health News staff writer Chris Weaver reports on developments surrounding efforts in the Senate regarding legislation on Medicare payments to physicians. “Legislation to ‘fix’ Medicare’s physician payment formula has stalled in the Senate, just days after Majority Leader Harry Reid, D-Nev., announced his intent to fast-track the measure. … The current proposal which was introduced last week by Sen. Debbie Stabenow, D-Mich., would do away with the formula and the scheduled pay cuts. Because these changes come with an estimated cost of $250 billion to the Medicare program and no off-sets, the bill has riled up budget hawks — both Republicans and Democrats — who say they will oppose the legislation until lawmakers find a way to pay for it” (10/20). Read the entire story.

 

Despite strong performance on earnings sheets, stocks for companies like UnitedHealth Group have faltered amid uncertainty about the future shape of American health care, BusinessWeek reports. The flagging stocks don’t reflect “the firms’ profits, sales, or anything specific to UnitedHealth or its competitors. Rather, it’s the health-care reform debate coming out of Washington.”

Despite the recession, revenues for UnitedHealth were up over 7 percent, and the firm’s third-quarter earnings of $0.89 per share bested expectations by $0.13. “Yet UnitedHealth shares are down more than 2% in 2009, even as the broader market is up almost 21% so far this year.”

“In such an uncertain position, health insurers need to maintain maximum flexibility, says Kunal Pandya, senior analyst at the Aite Group, a consulting firm.” The companies also recognize that some aspects of reform could lead to windfall earnings, such as a stringent requirement that that Americans buy health insurance (Steverman, 10/20).

State health agencies and Medicaid programs continue to take hits from spending cuts. A new program in Florida may be backfiring against some health workers with criminal records, while a novel health benefits program in Houston hopes to lower the number of uninsured.

The Associated Press: “Previous funding cuts in public health programs mean that a new reduction in state Department of Health Services funding to close a midyear budget shortfall would largely fall on services for the mentally ill and put Arizona in violation of court orders, officials said Monday” (Davenport, 10/20).

The Salt Lake Tribune: “The biggest losers following the Utah Department of Health’s recent $51 million budget cut are the poorest people in the state, whose access to health care has dwindled. Most of that money was lopped off Medicaid as part of the state’s cuts for fiscal year 2010, which began in July” (Rosetta, 10/20).

The Associated Press/The Miami Herald: “A new state law designed mainly to crack down on Medicaid fraud is having unexpected consequences by keeping some health care professionals from getting or keeping their licenses at a time when the state is suffering a shortage.” The law prohibits health workers with old convictions from applying for or renewing their licenses until 15 years after finishing their sentences (Kaczor, 10/21).

The Houston Chronicle: “On Tuesday, the nonprofit Harris County Healthcare Alliance unveiled the TexHealth Harris County 3-Share Plan, which divides monthly premiums among the employer, employee and a subsidy fund. In the program’s first two years, a $5.5 million subsidy pool will make coverage affordable for up to 5,000 workers.” The new benefits program “promises to put a small dent in the area’s massive uninsured ranks” (George, 10/20).

The Associated Press/WSJV (South Bent, Ind.): “Debate continues over whether Michigan should put a 3 percent tax on doctors’ gross receipts to raise more money for low-income health care programs. … Supporters, including some doctors, say the tax would give physicians who see Medicaid patients higher reimbursement rates instead of the 8 percent cut contained in Michigan’s current budget plan” (10/20).

I don’t know what hurts more – the fact that they just obliterated two pieces of perfectly fine hardware, or that they did so just to show they have l…

A new poll shows rising concern about how health reform would affect the cost and quality of care.

“Americans are increasingly worried about the cost and quality of medical care that could result from President Obama’s effort to revamp health care, but a majority still trust him more than Republicans to change the system, a USA TODAY/Gallup Poll shows,” USA Today reports. “The poll, which comes as Senate leaders are crafting a bill for a critical floor vote, finds that people who fear their costs would increase under the measure jumped 7 percentage points since last month, to 49%. There were similar increases among those who believe that both quality of health care and insurance company red tape will get worse if legislation passes” (Fritze, 10/21).

NPR has an analysis of recent polls, including one from ABC News and the Washington Post that found a clear majority of Americans support a public, government-operated health insurance option. But the results of such polls depend largely “on the language and framing of the questions. Supporters of the public option say it is merely an opportunity for those denied health insurance in the private market to obtain it from the government. In that guise, the public option seems to expand individual choice and freedom. That generally polls well.”

NPR adds, “Rasmussen Reports, a polling operation favored by many conservatives, asks the question this way: Would you support a public option ‘if it encouraged companies to drop private health insurance coverage for their workers?’ Given that as a consequence, Rasmussen’s poll shows the public opposed to the public option by 2 to 1.” NPR concludes that “polls are a poor guide in such matters. Not that lawmakers are oblivious to public opinion — to the contrary, they are typically obsessed with it. But the polls they care most about are not the national polls but the ones taken back in their states and districts. Polls back home can be vastly different from the national norm” (Elving, 10/20).

Since President Obama proposed using $25 million to test new ways to handle malpractice lawsuits, suitors have been lining up, the The Asssociated Press reports. One leading idea is to appoint expert panels to sort fact from fiction in malpractice claims. The “American Hospital Association has been shopping a new plan to lawmakers,” and malpractice reform advocates are expected to propose another strategy for a pilot program at a Health and Human Services hearing next week. Doctors say they perform extra tests on patients because they fear lawsuits.

While President Obama is also looking for ways to reduce extra testing, he opposes the “hard limits on jury awards” favored by doctors. The hunt is on for alternatives. The hospital industry’s plan would send patients to a state appointed expert panel for review. “The patient wouldn’t have to prove negligence, only that the doctor could have avoided the problem by following established guidelines for clinical practice. If the experts find that a patient was harmed and the injury could have been avoided, the panel would offer compensation. Payments would not be open-ended, but based on a publicly available compensation schedule” (Alonso-Zaldivar, 10/20).

Meanwhile, Obama appeared in New York Tuesday at a Democratic party fundraiser, the Associated Press/Boston Globe reports. He said disagreements between lawmakers were inevitable, but could be unnecessarily distracting. “Let’s make sure that we keep our eye on the prize,” he said (10/20).

“Top Senate Democrats intend to try to strip the health insurance industry of its exemption from federal antitrust laws, according to congressional officials, the latest evidence of a deepening struggle over President Barack Obama’s effort to overhaul the health care industry,” the Associated Press/Boston Globe reports. Top senators, including Harry Reid, D-Nev., the majority leader, Patrick Leahy, D-Vt., chairman of the Judiciary Committee, and Chuck Schumer, D-N.Y., planned to announce their strategy Wednesday.

The change would bring new regulations unto the industry, which views the push as a revenge attempt in response to recent insurance industry criticisms of the broader health reform bills. An industry group said insurers are already among the most heavily regulated companies (Espo, 10/21).

Sponsors of a similar bill in the House will attempt to add it to the much broader health reform legislation when it passes through the Rules Committee, The Hill reports. The House Judiciary Committee is expected to vote on the bill Wednesday. Rep. Diana DeGette, D-Colo., a co-sponsor of the bill, said, “There are only two industries with that exemption: insurance and Major League Baseball. If it ever had a rationale, it’s no longer operative” (Soraghan, 10/21).

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In Q3, Uncle Sam was the green IT king maker. Read the, “Green IT Q3 Wrap-up.”

Democrats backed away from an unfunded proposal to increase physician payments from Medicare in the face of opposition from Republicans and some fiscally conservative members of their own ranks, the New York Times reports. As the week began, Senate Majority Leader Harry Reid, D-Nev., had hoped to fast track the legislation to clear the way for a vote on the sweeping health reform legislation. The doctors’ payment bill would cost $247 billion, and block a 21 percent cut next year as well as smaller cuts in the following years. Democrats have worked to separate it from the broader legislation in order to keep the price tag of the overhaul below $900 billion.

Both sides characterized the battle over the doctors’ pay “fix” as a proxy for the larger health reform battle. Sen. Richard Durbin, D-Ill., said, “Republicans believe they can derail health reform by defeating the doctor fix.” Sen. Bob Corker, R-Tenn., said, “I hope that there will be senators on both sides of the aisle who revolt at the majority leader’s push to purchase the support of physicians by, in essence, creating legislation that puts our country another quarter-trillion dollars in debt” (Pear, 10/20).

“Supporters of the bill say the sharp payment cuts, unless reversed, would encourage doctors to stop seeing Medicare patients,” the Wall Street Journal reports. “The bill is supported by the American Medical Association and AARP, the lobbying group for seniors. Adoption of the measure would take one of the most contentious and costly issues off the table as the White House and Democrat-controlled Congress prepare for floor debate this fall on the broader bill” (Hitt and Adamy, 10/21).

The legislation was sponsored by Sen. Debbie Stabenow, D-Mich., who “says the fix should be made permanent and the cost should be made part of the budget process in years to come. For now, though, her legislation lacks the 60 votes needed to shut off debate in the Senate,” the Detroit Free Press reports (Spangler, 10/20).

Meanwhile, “Senator Kent Conrad, a North Dakota Democrat, said he and Senator Charles Grassley, an Iowa Republican, were discussing a possible compromise that would cost $25 billion over two years and — unlike the original measure — not raise federal deficits,” the Associated Press/Boston Globe reports (10/21).

Related KHN story: Advocates Urge Action Now To ‘Fix’ Medicare Doctor Payments (Weaver, 10/20).

A vaccine to protect against HIV may not be as effective as first thought, scientists said Tuesday.

The Wall Street Journal: “When first publicly disclosing the outcome of the vaccine trial in September, researchers said the vaccine had lowered the risk of infection by about 31%. That result was modest but statistically significant.” Two other analyses of the data have found, however, that the significance of the trials could be attributed to statistical chance. “Still, many scientists say the Thai experiment was useful because it was the first large-scale HIV-vaccine trial to yield a positive result” (Naik, 10/21).

The Los Angeles Times: “The key difference between the two types of analyses is that the original one excluded seven patients who were found to have HIV infections at the time the study began. The new analysis, based on what is called an intention-to-treat analysis, included all patients who were originally enrolled in the trial, producing the weaker results. Vaccine trials are typically analyzed both ways, and researchers expect to see statistically significant results from each analysis” (Maugh, 10/20).

The Washington Post reports that the results of the initial test were not statistically significant enough as defined by most medical research (Brown, 10/21).

The New York Times reports that the two analyses found the vaccine to be only 26 percent effective, lower than the 31 percent the initial trial had found— and that there was also a 16 percent probability that the results were due to chance. The clinical trial limit for the percentage that a result is due to chance is 5 percent (McNeil, 10/20).

Finally, The Senate passed a Ryan White CARE Act extension Monday that would allow more funding for a program that cares for people with HIV/AIDS, CQ reports (Ethridge and Nylen, 10/20). Open Congress has a summary of the bill.

Supporters of health reform legislation told a Senate subcommittee Tuesday that the insurance exchanges are critical for small businesses, which pay more than large companies to cover their employees and are cutting jobs and insurance coverage to control costs. The San Francisco Chronicle reports: “Legislation approved by the Senate Finance Committee last week would create insurance exchanges that supporters say would aid small businesses by spreading risk among a greater number of participants. The result, they said, would be lower premiums. … Small businesses could compare the price, quality and services of a number of plans offered through the exchanges, said Karen Mills, the administrator of the U.S. Small Business Administration.”

In the Senate Finance proposal, “businesses with up to 100 employees could enter into an insurance exchange.” The bill “also includes a $23 billion small-business tax credit to encourage small businesses to participate in the exchange.” Meanwhile, Sen. Olympia Snowe, R.-Maine, the only Republican on the Finance Committee to vote for the bill, “challenged the piece of the bill that would fine employers with more than 50 full-time employees who do not offer health coverage” (Joseph, 10/21).

The Boston Globe/The Associated Press reports on the struggles of one small business owner and another subcommittee hearing on a bill to create an exception for people whose medical bills principally caused their financial distress: “A Rhode Island woman urged senators yesterday to ease bankruptcy rules for people devastated by medical debt, as she described the pain of losing a child and going broke from his health care bills. The frightful experience of Kerry Burns, of Coventry, R.I., raised a crucial question of bankruptcy law: should people going broke due to high medical bills get a break over those bankrupted by divorce or credit card bills?” (Margasak, 10/21).

“As Congress grapples with how to rein in the high cost of healthcare in America, the option of outsourcing hard decisions to a new, independent commission is gaining momentum,” the Christian Science Monitor reports. “Backers say a commission with a mandate to improve America’s healthcare delivery system and rein in unsustainable costs could be a game-changer. At a time when lawmakers are getting hammered by interest groups, it’s also a nod to the goal of fiscal discipline without having to specify where those cuts will come. Critics say it’s the latest sign that Congress can’t muster the political will to cut unsustainable costs.”

The Committee for a Responsible Budget released a report Monday that found none of the current bills do enough to control costs. “The Senate Finance Committee’s healthcare bill proposes a 15-member, independent Medicare Commission to present Congress with comprehensive reform proposals. In years when Medicare costs are projected to be unsustainable, these proposals take effect, unless Congress intervenes with an alternative that achieves the same level of savings. … The Congressional Budget Office estimates that such a commission would reduce Medicare spending by $22 billion from 2015 to 2019, when its recommendations would begin to be implemented” (Chaddock, 10/20).

Meanwhile, Congress Daily reports on a new push for keeping consumers’ health costs down. “Patient, consumer and labor groups are crafting a proposal they plan to shop to key senators to make health coverage more affordable than it would be under legislation approved by the Senate Finance Committee, hoping to influence a final Senate version of healthcare overhaul. Eleven groups, including AARP, The American Cancer Society Cancer Action Network and the Service Employees International Union, are working on the pitch, which has not been signed off on by every group. A draft outline pushes further expanding Medicaid to those earning 150 percent of the federal poverty level and decreasing out-of-pocket costs for certain wage earners. The changes would cost $103 billion, according to the outline. It does not suggest a specific offset, but it said the groups might ask leaders to designate any additional cost savings identified in the final bill to be allocated toward affordability measures” (Edney, 10/20).

New figures show that enrollment in medical school continues to rise as schools try to increase the number of graduates to meet the increasing physician need. But doctors cautioned that more residency positions are needed and urged federal officials to fund them.

Physicians News Digest reports: “Enrollment in both new and existing U.S. medical schools continues to expand to meet the nation’s need for more doctors, according to data released today by the AAMC (Association of American Medical Colleges). First-year enrollment in the nation’s medical schools rose this year by 2 percent over 2008 to nearly 18,400 students.”

“Expansion in medical school enrollment as well as graduate medical education, or ‘residency’ training positions is needed to avert an expected shortage of 124,000 to 159,000 physicians by 2025. As a result, the AAMC supports the ‘Resident Physician Shortage Reduction Act’ (S.973/H.R.2251), which increases the number of Medicare-supported training positions for medical residents by 15 percent (approximately 15,000 slots). None of the reform bills currently before Congress includes more Medicare funding for graduate medical education positions. Instead, both the House and Senate legislation would redistribute about 1,000 unused residency training slots among a small group of targeted states. This year’s AAMC data also indicated that the pool of medical school applicants remained stable at 42,269, a slight increase over 2008’s total of 42,231 applicants” (10/20).

MedPage Today reports: “And this year four new medical schools — FIU Herbert Wertheim College of Medicine in Miami, Commonwealth Medical College in Scranton, Pa., Texas Tech University Health Sciences Center Paul L. Foster School of Medicine in El Paso, and the University of Central Florida College of Medicine in Orlando — accepted their first students, adding 189 to the entering class tally.”

A early signs, such as the number of people taking the Medical College Admission Test, indicate that “next year’s medical school applicant pool will continue to edge upward. From January to August of this year, more than 67,000 individuals took the MCAT exam, a nearly 3% increase over 2008.”

Dr. Darrell G. Kirch, president of AAMC, said “medical school enrollment now appears to outstrip postgraduate training capacity. … The medical schools are working to meet that need, he said, but more residency training positions are needed” (Peck, 10/20).

U.S. News & World Report/HealthDay News reports on a different study that analyzed data in the American Medical Association Physician Masterfile and the U.S. Census Bureau Current Population Survey (CPS) to project the supply of doctors through 2040: “The future physician workforce in the United States may be younger but fewer in number than previously projected, a new study claims. … In an average year, the CPS estimated 67,000 (10 percent) fewer active physicians than Masterfile. Estimates from both databases were similar for physicians aged 35 to 54, but showed marked differences for the numbers of active younger and older physicians. On average, the CPS estimated 22,000 (20 percent) fewer active physicians per year aged 55 to 64, and 35,000 (51 percent) fewer active physicians per year aged 65 and older than the Masterfile. The CPS estimated more young physicians (ages 25 to 34) than the Masterfile, with the difference increasing to an average of 17,000 (12 percent) during the final 15 years (2025 to 2040).” The study was published in the Journal of the American Medical Association (10/20).

WSJ Blog reports: “For all the tumult in health care over the past decade, the picture for medical school applicants hasn’t changed all that much. The number of first-year slots and the number of applicants have both grown a bit. But the ratio of applicants to slots — a key number for those who want to go to medical school — has remained essentially flat, at just over two applicants for every spot” (Goldstein, 10/20).

We’ve mentioned the video game World of Goo a couple times in the past. First, when its creators got upset about silly regional restrictions that were put on the sale of the game, and later when they noted that releasing a game without DRM showed no change in the piracy rate. Yes, the game was widely shared, but at no different a rate than when they’d offered games with DRM. Recently, they decided to try a name your own price experiment to see what would happen. While I’m still not enamored by such pure “give it away and pray” type models, we do keep hearing success stories of people who have used them, combined with a strong and loyal fanbase.

Now they’ve released some preliminary data, showing that they got about 57,000 new sales, with an average price of about $2 (so, over $100,000 sales in a week — though, that’s the gross number, the net is less, due to Paypal transaction fees). They also added a survey, and found a key point:

Few people chose their price based on the perceived value of the game. How much the person feels they can afford seems to play a much larger role in the decision than how much the game is worth.

This is another good point that highlights the separation between price and value — which too many falsely assume are the same thing. There were also a significant number of people who said they paid because they liked the “pay what you want model, and wanted to support it.” So they were paying to support the model, rather than the game itself, which is interesting. I wonder if that component would fade over time as these sorts of models become more popular.

Either way, another case study in business model experimentation.

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It looks like Dell’s rumored slightly-larger-than-an-iPod-touch Android MID that we heard about back in late June has finally seen the light of day.

Apparently called the Dell Streak (I hope that’s not the final product name), it’s a 5-inch mobile internet device similar to the recently-released Archos 5 Internet Tablet with the added functionality of 3G wireless data connectivity.

The actual hardware is labeled as an “engineering sample” with a US-based model number, so it could still be a while until we actually see the finished product here. That being said, early specs include a 5-inch touchscreen with 800×480 resolution, Android 2.0 (Donut), Wi-Fi/Bluetooth/3G (it has a SIM card slot), 5-megapixel camera with LED flash, microSD expansion slot, and a 1300mAh-capacity battery.

Here’s a hands-on video from Tinhte.com:

And a few photos:

[Tinhte.com via SlashGear]

From Gmail to YouTube and from Voice to Maps, it seems there is hardly a service that Google isn’t in the business of providing. So we hope you can understand our somewhat lack of shock when we learned of the rumor that Google is on the cusp of releasing its own music service to be known as Google Audio. At the moment very little is know, but the big question seems to be focused on whether or not Google Audio — if it is indeed real — will provide streaming or downloadable music as it currently offers in China. Can we get an Amen for both?

Read

Dow Jones & Company said today it would launch "The Wall Street Journal Professional Edition," aimed at providing business readers with more in-depth information.

The Wall Street Journal Professional Edition will be available to businesses in November with a wider availability in January for $49 a month or just under $600 a year. The new offering combines news from Dow Jones and The Wall Street Journal along with information from Factiva, the news archive owned by Dow Jones.

"This really is a new model for the delivery of high-quality business news for a sophisticated audience," said Robert Thomson, editor-in-chief of Dow Jones & Company and managing editor of The Wall Street Journal.

"We are not imprisoned by a terminal and are thus able to produce a more contemporary Web-based news feed tailored to a sector, a company or an asset class. Readers will be able to create a virtual newswire and alert system that suits their specific business needs."

• Key offerings of The Wall Street Journal Professional Edition include:
• News and information from more than 17,000 global sources, some of which is not available to the public
• A one-year archive of Factiva and a two-year archive of wsj.com content
• More than 30 industry pages managed by Dow Jones editors
• Six key industry sections managed by Wall Street Journal editors who select news and information about pharmaceuticals, healthcare, energy, media & marketing, telecommunications and technology
• Personalized homepage with breaking news alerts

It looks like Yahoo’s revolving door recently spun around yet again.  A senior vice president of communications and community properties has left the company, and another man’s joined it and been given the title "Vice President of Corporate Development."

Scott Dietzen is the (former) SVP who found the exit.  Before getting picked up by Yahoo, he was the president and CTO of Zimbra.  Dietzen also received his Ph.D., M.S., and B.S. from Carnegie Mellon University, so his departure is far from insignificant.

The one bright spot from Yahoo’s perspective is that, rather than immediately join Google or Microsoft, Dietzen said during an rPath interview that he’s just taking an open-ended sabbatical.

As for the new hire, his name is Andrew Siegel.  Kara Swisher reports that he’ll be in charge of mergers and acquisitions.  Siegel used to work for General Electric, and also spent some time at Merrill Lynch.  He attended Syracuse University and the New York University School of Law.

It’s reasonable to assume that Yahoo has a lot of confidence in Siegel’s abilities, considering how many properties the company is reportedly trying to sell.  There’s the pending deal with Microsoft to consider, too.

Forget the new Apple products from yesterday, the big news of the day was the Barnes & Noble Nook reader that might just shake up the stale e-book reader image the Kindle has in-part created. The Nook really seems like the device to beat now with the two screens, 10 day battery life, WiFi and AT&T 3G, native PDF support, and is the same price as the Kindle at $260. Yesterday’s coverage has been condensed below for your viewing pleasure just in case you missed something.

Rumor: The Barnes & Noble Nook reader to be revealed and available tomorrow for $259

The Barnes & Noble Nook reader name wasn’t vetted well

The $259, dual-screen Barnes & Noble Nook reader gets official

Almost live from Barnes and Noble’s Nook event

Nook.com is live for your viewing pleasure

Chart: How the Nook stacks up in the e-reader race

Corinthian Colleges Inc. (Nasdaq: COCO) has agreed to buy career college operator Heald College for $395 million in cash. Heald is minority-owned by Summit Partners, and operates nine campuses in Northern California, Hawaii and Oregon.

PRESS RELEASE

Corinthian Colleges, Inc. (Nasdaq: COCO) has signed a definitive agreement to acquire Heald Capital LLC, the parent company of Heald College. Heald is a regionally accredited institution that has been delivering quality career-focused academic programs since 1863 and has created a strong brand in its markets. Heald prepares students for careers in healthcare, business, legal, information technology and other growing fields, primarily through associate degree programs. Headquartered in San Francisco, California, Heald operates 11 campuses and had approximately 12,300 students at September 30, 2009.

Heald has nine campuses in Northern California, one campus in Honolulu, Hawaii and one campus in Portland, Oregon. In addition, Heald recently received approval from its accreditation agency, The Accrediting Commission for Community and Junior Colleges of the Western Association of Schools and Colleges, to offer fully online degrees. The College expects to begin enrolling exclusively online students in early 2010. Corinthian currently has five nationally accredited schools in Northern California which primarily offer short-term diploma programs in healthcare, automotive technology and the trades.

“The acquisition of Heald is consistent with Corinthian’s strategy of increasing its presence in markets with high growth potential and expanding its ability to offer regionally accredited programs,” said Peter Waller, Corinthian’s chief executive officer. “Upon completion, the Heald acquisition will give Corinthian an increased presence in Northern California, Oregon and Hawaii; a growth platform for campus-based and online regionally accredited programs; and a third strong brand. In addition, both organizations are dedicated to the mission of changing students’ lives through quality, career-oriented education. We look forward to welcoming Heald’s chief executive Nolan Miura and his capable team as a new and separate division at Corinthian.”

“We fully support this proposed transaction, as Corinthian and Heald are both committed to preparing students for academic, personal and professional success,” said Nolan Miura, Heald’s president and chief executive officer. “I am proud of the strong culture and team that we have built at Heald and believe that our passion for student achievement has fueled the institution’s substantial progress over the past few years. We believe the transaction will allow us to build on past success by giving Heald access to greater resources and through the sharing of best practices. Having spent eight years at Corinthian as a senior executive, I know personally that both organizations strive to put students first and to provide a positive culture for faculty and staff. We look forward to joining Corinthian and to the opportunities it will create for Heald.”

Heald Capital’s controlling shareholder is Brad Palmer, Founder and Managing Partner of Palm Ventures, LLC, who organized Heald Capital to acquire the majority interest in Heald College in 2007. Mr. Palmer recruited the current Heald Trustee Board, which includes a number of nationally recognized education and business leaders, and he has worked cooperatively with Mr. Miura and management to provide the resources essential for the development of the college. In March 2009, Mr. Palmer sold a minority equity interest in Heald to funds affiliated with Summit Partners.

Transaction Terms

Under the terms of the definitive agreement, Corinthian will pay the purchase price of $395 million in cash at closing in exchange for all outstanding membership interests of Heald Capital LLC, the parent company of Heald College, subject to certain working capital items. The purchase price also includes the repayment or assumption of Heald’s debt and other closing payments.

By virtue of Heald’s limited liability ownership structure, Corinthian will receive a tax “step up” in the assets of Heald Capital LLC and its subsidiaries that is expected to provide substantial future tax benefits to Corinthian. Assuming a discount rate of 8% and an effective tax rate of 40%, these benefits have a net present value to Corinthian of approximately $70 million, implying an effective net purchase price of $325 million, or 8.4 times Heald’s projected fiscal 2009 adjusted EBITDA.

Corinthian plans to finance the acquisition through a combination of cash and debt, using its recently announced $280 million credit facility and available cash. The transaction is subject to regulatory approvals and customary closing conditions and is expected to close in the third quarter ended March 31, 2010.

BofA Merrill Lynch acted as financial advisor to Corinthian, and O’Melveny & Myers LLP served as Corinthian’s legal counsel. Kirkland & Ellis served as legal counsel to Heald and to the sellers.

Financial Impact

Heald is expected to generate revenues of approximately $180 – $185 million and adjusted EBITDA of approximately $38.5 million for the fiscal year ending December 31, 2009. Heald’s student population is expected to grow by approximately 30% in its fiscal year ending December 31, 2009, compared to its fiscal year ended December 31, 2008.

Excluding transaction-related expenses, we expect the acquisition to be slightly accretive to earnings in the second half of fiscal 2010, and to add approximately $0.15 – $0.20 to diluted earnings per share in fiscal 2011. These projections are based upon preliminary estimates of the allocation of purchase price intangible assets. The final allocation will be determined after closing.

Conference Call Today

We will host a conference call today at 12:00 p.m. Eastern Time (9:00 a.m. Pacific Time), for the purpose of discussing the definitive agreement with Heald. The call will be open to all interested investors by dialing (866) 383-8009 (domestic) or (617) 597-5342, pass code 61656578 or through a live audio web cast at www.cci.edu (Investor Relations/Webcasts & Presentations) and www.streetevents.com. The call will be archived on www.cci.edu after the call. A telephonic playback of the conference call will also be available through 5:00 p.m. ET, Tuesday, October 27, 2009. To hear the replay, dial (888) 286-8010 (domestic) or (617) 801-6888 (international), pass code 96241011.

About Corinthian Colleges

Corinthian Colleges is one of the largest post-secondary education companies in North America, with annual revenues of $1.3 billion and a student population of over 86,000 students. The company’s mission is to prepare students for careers in demand or for advancement in their chosen field. Corinthian offers diploma programs and associate, bachelor, and master’s degrees in a variety of high-demand occupational areas, including healthcare, business, criminal justice, transportation technology and maintenance, construction trades and information technology. More information can be found on Corinthian’s website at www.cci.edu.

About Heald

Founded in 1863, Heald is a regionally accredited private career college with 11 campuses located in Northern California; Portland, Oregon; and Honolulu, Hawaii. Heald offers Associate in Applied Science degrees, Associate of Arts degrees, diplomas and certificates in healthcare, business, legal, information technology and other growing fields.

About Palm Ventures

Palm Ventures (www.palmventures.com), based in Greenwich, CT, was founded by Brad Palmer and is focused on investing Palmer family capital in companies which have a positive and transformative impact on society. Current industry focus is in education, health care, human resources, business services, financial services and renewable energy. Palm Ventures takes a strong value-added approach to the development of its portfolio companies, leveraging a broad network of strategic investors, retired executives and operating professionals who provide strategic advice and oversight to companies and management. In addition to Heald, Palm Ventures has made investments in six other successful education companies.

About Summit Partners

Summit Partners (www.summitpartners.com) is a growth equity investor that provides private equity and venture capital to rapidly growing companies. Founded in 1984, Summit has raised more than $11 billion in capital and has provided growth equity, recapitalization and management buyout financing to more than 300 growing companies across a range of industries and geographies. Summit Partners seeks outstanding management teams that have self-financed their companies to profitability and market leadership.

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