Health Firms Warn of Earnings Declines

Bergen Brunswig Corp., a suppliers of drugs to health-care facilities, warned that its earnings could fall short of forecasts because a new Medicare reimbursement program is cutting revenue. Changes to Medicare, the federal health insurance program, has shifted its payment method from a cost-based to a fixed-amount system. This means doctors will receive a fixed amount of money for different types of care compared with the previous method, which reimbursed them for whatever costs they had. Meanwhile, Covington, Ky.-based Omnicare, which also provides pharmacy services to health-care facilities, said it expects second-quarter earnings to fall short of expectations as well. In New York Stock Exchange trading, Bergen shares fell 22%, losing $4.06 to close at $14.81, while Omnicare fell 20%, falling $3.25 to close at $12.81 on the NYSE.