Friday, September 21, 2012

Just the Latest Legal Settlement for HCA

Last month, we posted about investigative reports that suggesting that for-profit hospital chain HCAwas pushed by its private equity owners to put short-term revenue ahead of good patient care.  A legal settlement announced this week corroborates these concerns. 

As reported by television station WRCB in Chattanooga, TN,
HCA Inc., one of the nation's largest private hospital chains, has agreed to pay $16.5 million to settle alleged violations of the Ethics in Patient Referrals Act (also known as the Stark law), the False Claims Act, and other federal and state laws and regulations in connection with the operation of its subsidiary, Parkridge Medical Center, Inc., in Chattanooga.
In addition, Parkridge Medical Center has entered into a comprehensive five-year Corporate Integrity Agreement with the Office of Inspector General of the U.S. Department of Health and Human Services (HHS-OIG) to ensure its continued compliance with federal health care benefit program requirements.
As alleged in the settlement agreement, during 2007, HCA, through its subsidiaries Parkridge and HCA Physician Services (HCAPS), entered into a series of financial transactions with a physician group, Diagnostic Associates of Chattanooga, through which it provided financial benefits intended to induce the physician members of Diagnostic to refer patients to HCA facilities.
The financial benefits included lease of office space from Diagnostic at a rental rate well in excess of fair market value to meet the mortgage obligations of the Diagnostic members and release of Diagnostic members from a separate lease obligation. These financial arrangements violated the Ethics in Patient Referrals Act and the Anti-Kickback Statute – laws designed to protect patients as well as the integrity of government-funded health care benefit programs such as Medicare, Medicaid, TRICARE, and TennCare.
The issue here were allegations that HCA and its subsidiaries were paying physicians extra so that they would refer patients to an HCA hospital. Obviously, physicians are supposed to put each patient's interests ahead of extraneous considerations, and hence should make referral decisions based on the patients needs, and the likely benefits and harms of the referral, not the amounts the physicians might make from such payments.

Referrals for particular services can be very lucrative for hospitals.  So this settlement seems to provide more evidence that to get profitable referrals, HCA was willing to subvert physicians' values by paying physicians to induce to make what might have been the wrong decisions for individual patients.  Of course, in this situation some physicians were hardly blameless, since they were also willing to set aside their values to receive the payments that generated those referrals.

This fits with the thesis we advanced last month.  While hospitals are supposed to have a mission to put care of the sick ahead of all else, it appears that for-profit hospitals, and especially those owned by private equity are more likely to put short-term revenue ahead of patient care.

As an aside, while this settlement provides useful information, do not think of it as a solution to the immediate problem. 

As we have frequently asserted, it is doubtful that the relatively small payment and the relatively unlikely to be enforced corporate integrity agreement imposed in this settlement will change the company's behavior, in the absence of any negative consequences for the people who authorized, directed or implemented the bad behavior.  HCA once made a $1.7 billion fraud settlement, at the time the biggest such settlement ever made (see this post).  However, the company's CEO at the time, Rick Scott, left the firm with a golden parachute and no negative consequences, and is now Governor of Florida.  If that previous huge settlement did not deter the more recent bad behavior in the absence of any penalties for company executives, why should we expect that the current comparatively tiny settlement also in the absence of such penalties will have any effect?

As we have now said many, many times, we will not deter unethical behavior by health care organizations until the people who authorize, direct or implement bad behavior fear some meaningfully negative consequences. Real health care reform needs to make health care leaders accountable, and especially accountable for the bad behavior that helped make them rich.

Furthermore, as I wrote last month, we need to challenge the notion that direct health care should ever be provided, or that medicine ought to be practiced by for-profit corporations. Before market fundamentalism became so prominent, many stated prohibited the corporate practice of medicine, and the American Medical Association forbade the commercialization of medicine. It is time to heed that wisdom. I submit that we will not be able to have good quality, accessible health care at an affordable price until we restore physicians as independent, ethical health care professionals, and until we restore small, independent, community responsible, non-profit hospitals as the locus for inpatient care.


Anonymous said...

The shareholders are paying rather than the CEO. Cold you imagine if Rick Scott had to pay out of pocket for his failure to supervise his team?

Steve Lucas said...

It must be remembered that HCA is involved in an ongoing investigation in Florida regarding up coding heart patients to receive unnecessary stents. Compounding this debacle is that certain doctors were removed from service because they were aggressively placing stents when the patient, with a little paperwork magic, could be eligible for bypass surgery, thus generating greater revenue for the hospital.

It is also not prudent to believe that this situation does not exist in hospitals around the country. My local community is dominated by one large hospital and it seems everyone who uses an affiliated doctor needs testing done at the hospital.

“We need to be sure” seems to be the magic words to untold riches in the medical world.

Steve Lucas

Afraid said...

Roy, you must be wrong, bigger and bigger healthcare providers in the form of ACOs inspired by the government are THE answer everyone is touting.

How could you be so wrong?

Anonymous said...

And just last week HCA informed emergency physicians at Summit, Skyline, Hendersonville, and Dickson hospitals in Middle Tennessee (plus two more hospitals in Chattanooga) that HCA was pulling their contracts to staff the emergency departments of those hospitals and turning the contracts over to Valesco Ventures, a joint venture of EmCare and HCA. In all the Middle Tennessee hospitals but Dickson - which is currently staffed by TeamHealth - the EmCare/HCA joint venture will be taking over from and destroying independent, local, physician-owned emergency medical groups. This seems to violate federal antikickback laws and Tennessee laws against fee-splitting and the employment of emergency physicians by nonacademic hospitals. But no one seems to care. Not the state, not the feds, not the AMA, not ACEP (the Am. College of Emergency Physicians) - one of whose leaders is the South Region CEO for EmCare - no one tries to stop this kind of thing but AAEM (the Am. Academy of Emergency Medicine). AAEM is a lone voice, crying in the wilderness.