Another Sign of Resistance? - Doctors Sue Hospital Systems Alleged to Put Money Ahead of Mission

In two recent instances, physician groups have filed lawsuits against hospital systems alleging that managers were directly putting revenue ahead of patient welfare.  Although so far this is all about allegations, and nothing has been decided in courts of law, the details provided in the current news coverage are disturbing.

We will present the cases in the order that news reports were published.

Prime Healthcare Services

California Watch reported on a lawsuit filed against Prime Healthcare Services, a California based for-profit hospital system that has got its share of unfavorable media coverage.  In summary,

A dozen Southern California doctors are accusing the leadership of a Prime Healthcare Services hospital of refusing to notify them about their patients because they won’t engage in profit-driven practices, according to a request for a restraining order filed this week.

The San Bernardino County physician group suing Chino Valley Medical Center and its director say it has been asked to needlessly admit patients from the emergency room into hospital beds, according to the lawsuit filed Wednesday in San Bernardino County Superior Court. The group’s doctors also have been urged to document patient conditions as more complex or severe than they are, the filing says.

The doctors suing the hospital maintain that both practices are meant to drive up hospital bills. The result of their refusal to go along, they say, is that they’re not receiving what they characterize as legally mandated notifications when their patients land in the hospital.

 The physicians have asked the judge to lift the alleged freeze in communication, saying it puts fragile patients in danger. 

The article described one particularly concerning incident

[The lawsuit] ... claims one patient with a serious breathing condition was admitted without her doctor’s knowledge. During her stay, Chino Valley staff operated to remove her gallbladder.

'Because (Inland) was not contacted, no doctor gave the required pulmonary clearance nor did the patient receive proper respiratory treatment prior to surgery,' the lawsuit says.

The suit alleges that such practices put patients 'at serious risk of injury and even death.'

The article also described allegations that at the root of the problem was the hospital system's management's insistence on revenue ahead of all other concerns:

The physician group suing Chino Valley holds contracts with about a dozen managed care firms that expect group doctors to handle local members’ care in the case of a hospitalization.

The Inland doctors say that instead, they’ve been stonewalled. In their lawsuit, they say the silence is a result of their refusal to follow the direction of the hospital’s president and chief medical officer, Dr. James Lally, a defendant in the case.

Lally suggested that the physicians document serious medical conditions, such as a certain type of pneumonia that Medicare pays hospitals a premium to treat, the suit says.

Lally also discouraged doctors from putting patients on 'observation' status, according to the suit. That means a doctor will monitor a patient’s condition, rather than sending him or her home or admitting the patient to a hospital bed.

The lawsuit alleges that Lally prefers doctors to admit patients into the hospital so the hospital can receive 'significantly higher Medicare reimbursements.'

This is not the first time that Prime has been accused of mischief:

A yearlong California Watch series documented high rates of lucrative and severe medical conditions at Prime hospitals, as well as an aggressive approach to admitting ER patients into hospitals, rather than treating them in the ER and sending them home.

State hospital data analyzed by California Watch showed that Prime hospitals admitted about 63 percent of Medicare-funded ER patients into hospitals in 2009, compared with 39 percent at the state’s other leading for-profit chain, Tenet Healthcare Corp. In response, Prime said the analysis 'utterly fails to consider the medical basis for admissions.'

The U.S. Justice Department is investigating Prime’s billing practices, according to a document the chain filed as part of a hospital purchase plan. Dr. Prem Reddy, founder of the Ontario, Calif.-based chain, has overseen rapid growth since Prime’s 2001 start as the company expanded into a coast-to-coast 21-hospital chain.

Also,

Prime Healthcare has been criticized for aggressively admitting paying patients since its founding. Reddy once referred to an ER as a 'gold mine,' according to court testimony from the medical director of the first hospital taken over by the Prime founder. The reference, which the medical director said during a 2005 trial, was to numerous Kaiser and Medicare patients who could be admitted for further care.

Another doctor told the Orange County Board of Supervisors in 2006 that when Prime took over Huntington Beach Hospital, doctors were urged to admit insured patients with maladies as minor as a headache.

Yet, Prime Healthcare claims to honor the value of compassion:

 We provide an environment that is caring and conducive to healing the whole person physically, emotionally and spiritually. We respect the individual needs, desires and rights of our patients.

Dignity Health

Our second story comes from Nevada courtesy the Las Vegas Sun.   It involves Dignity Health, a multi-state non-profit health system.  The story basics are:

Two former St. Rose Dominican Hospital emergency room doctors say they were forced to transfer patients from one St. Rose hospital to another so its owners and their boss could profit — at the expense of patient safety.

The doctors allege in similar lawsuits that the frequent patient transfers among the three St. Rose hospital campuses — Rose de Lima and Siena in Henderson and San Martin in the southwest valley — put profit ahead of patient care. When they resisted, they say they were retaliated against and eventually fired.

The 3-year-old ambulance company that was used to shuttle patients was partly owned by both the hospital company and the director of the emergency department at the Siena campus at the time, Dr. Richard Henderson. According to their lawsuits, Henderson pushed hard in emails to ER doctors to promote patient shuttling and authorized bonuses to doctors who transferred the most patients to other St. Rose facilities.

Again, there was one telling incident:

Both lawsuits invoke the case of a gravely sick 16-day-old baby who arrived at St. Rose de Lima hospital, where a doctor determined the child needed pediatric critical care services at the Siena campus and requested a Henderson Fire Department unit for transport.

But according to the lawsuits, Henderson ordered that Community Ambulance transport the child instead. He made the request despite longer wait times for Community Ambulance compared to Henderson Fire Department’s quicker response times of 10 minutes or less, according to the lawsuits.

This article also described how money allegedly came before patient care:

The court papers include email exchanges between Henderson and the other doctors in the ER group. In a November 2010 email, he discusses ways to punish doctors who do fewer patient transfers and reward those who tally more transfers:

'(T)op quarter $1,000, next quarter $500. Bottom quarter up or out talk at annual evaluation.' In other words, according to doctors who received the email, Henderson proposed that doctors would be divided into strata based on who recommended the most transfers, with the top group winning bonus money while those who performed the least would eventually be terminated.

Transferring patients was such a priority that doctors were ordered to fill out non-transfer forms, explaining a decision not to transfer patients.

In another email, Henderson expressed concern that doctors were too quick to rule out transfers: 'How do you weed out the people that call a runny nose ‘unstable for transfer’? The performance we (admin) are looking for are transfers. Suggestions?'

A former member of the medical staff put it this way: There was constant pressure to transfer transfer transfer.'

Note that Dignity Health was until recently called Catholic Healthcare West (look here).  It still claims the mission:

 We are committed to furthering the healing ministry of Jesus. We dedicate our resources to:

• Delivering compassionate, high-quality, affordable health services;
• Serving and advocating for our sisters and brothers who are poor and disenfranchised; and
• Partnering with others in the community to improve the quality of life.

Note also that under its former name, Catholic Healthcare West has received our previous attention, for accusations that it overcharged uninsured patients (look here),  which it later settled (look here), and for settling a lawsuit claiming the system filed false Medicare claims (look here). 

Summary

 Just another day at the office....  Here are two more examples of how large health care organizations, in this case, large hospital systems, seem to put short-term revenue ahead of all other concerns, and in particular, ahead of patient welfare.  In both cases, the alleged practices seemed to make a mockery of the hospital systems high-flown mission or values statements.  In both cases, the hospital systems had records of past questionable behavior.  Yet many hospital systems have grown rich and powerful, and made their leaders personally rich, by trading on their reputation for community care and service, and marketing their warm and fuzzy missions and values. 

Over the years, we have documented over and over how leadership of health care organizations have subverted their organizations' missions and the values of health care professionals.  Yet for a long time, many health care professionals just kept their noses to their grindstones, ignoring what was going on or suffered in silence.  Now at least a few have broken the silence.  Health care professionals and society at large needs to hold large health care organizations' leadership accountable for their missions, and push out leaders who put their own pocketbooks and their organizations' revenue ahead of patients' and the public's health. 

More Hospitals Settle, But Not for Much

In late February, there have been several notable legal settlements made by more or less prominent hospitals, discussed in rough order of size.

United Regional Health Care System

Per the Cypress Times,

The Department of Justice announced today that it has reached a settlement with United Regional Health Care System of Wichita Falls, Texas, that prohibits it from entering into contracts that improperly inhibit commercial health insurers from contracting with United Regional’s competitors. The department said that United Regional unlawfully used these contracts to maintain its monopoly for hospital services in violation of Section 2 of the Sherman Act, causing consumers to pay higher prices for health care services.

Note that this appears to be the first settlement involving the Sherman Anti-Trust Act that included a hospital system, or any health care organization which we have discussed. As the Times article mentioned,

This is the first case brought by the department since 1999 that challenges a monopolist with engaging in traditional anticompetitive unilateral conduct.

Here is more detail about the alleged offenses:

According to the complaint, United Regional is by far the largest hospital in Wichita Falls. Its share of general acute-care inpatient hospital services is approximately 90 percent, and its share of outpatient surgical services is more than 65 percent. It is the region’s only provider of certain essential services such as cardiac surgery, obstetrics and high-level trauma care. In Wichita Falls, United Regional’s average per-day rate for inpatient hospital services sold to commercial health insurers is about 70 percent higher than its closest competitor for the services that are offered by both hospitals.

The department said that in order to maintain its monopoly in the provision of inpatient hospital and outpatient surgical services, United Regional systematically required most commercial health insurers to enter into contracts that effectively prohibited them from contracting with United Regional’s competitors. United Regional’s contracts required these insurers to pay significantly higher prices if they contracted with a nearby competing facility. Since United Regional is a must-have hospital for any insurer that wants to sell health insurance in the Wichita Falls area, and because the penalty for contracting with United Regional’s rivals was so significant, almost all insurers offering health insurance in Wichita Falls entered into exclusionary contracts with United Regional. As a result, competing hospitals and facilities could not obtain contracts with most insurers and were less able to compete, helping United Regional maintain its monopoly in the relevant markets and raising health-care costs to the detriment of consumers.

As far as I could tell, however, for this apparently severe offense there will be no actual penalty. The settlement only appears to provide for a promised change in future behavior by the hospital:

The proposed settlement, which if accepted by the court would be in effect for seven years, restores lost competition by prohibiting United Regional from using agreements with commercial health insurers that improperly inhibit insurers from contracting with United Regional’s competitors. In particular, United Regional is prohibited from conditioning the prices or discounts that it offers to commercial health insurers based on whether those insurers contract with other health-care providers and from inhibiting insurers from entering into agreements with United Regional’s rivals. United Regional is also prohibited from taking any retaliatory actions against an insurer that enters into an agreement with a rival provider.

So if a hospital engages in actions that restrain competition and results in a de facto monopoly, all the hospital leaders must fear is that at some point it may have to change its monopolistic behavior, according to this settlement.

Catholic Healthcare West

Per the San Jose Business Journal,

Catholic Healthcare West, parent company to local Mercy hospitals, has agreed to pay $9.1 million to settle allegations that seven of its hospitals submitted false Medicare claims, U.S. Attorney Benjamin Wagner announced late Friday.

Here is more detail about the alleged offenses:

The hospitals include Community Hospital of San Bernardino, St. Bernadine Medical Center in San Bernardino and St. Elizabeth Community Hospital in Red Bluff.

The settlement also included allegations that O’Conner Hospital in San Jose, Seton Medical Center in Daly City and St. Joseph’s Hospital and Medical Center in Phoenix submitted inflated costs for their home health agencies and were overpaid. The agreement also resolves allegations that St. Joseph’s overstated how much was owed in disproportionate share funding for indigent patients.

CHW no longer owns O’Conner Hospital or Seton Medical Center.

The settlement resolves allegations that St. John’s Regional Medical Center in Oxnard was overpaid for treating a high percentage of patients with end-stage kidney disease for several years, including two when it was not eligible.

Note that while the amount of the payment assessed appears substantial, it will be made a very long time after the alleged bad behavior occurred:

All of the problems occurred in the 1990s. Federal investigators began looking into the matter in 2001, but it took years to compile evidence and reach a settlement. All of the hospitals had set aside money in a reserve account should they have to pay funds back to the government.

So if a hospital submits false claims to the US government, hospital leaders need not fear paying anything back for more than 10 years, according to this settlement.

By the way, this was not the first such settlement that Catholic Healthcare West has had to make:

In 1998, a whistleblower at Woodland Healthcare disclosed instances of alleged fraud by two medical groups affiliated with local Mercy hospitals, Woodland Clinic Medical Group and Medical Clinic of Sacramento.

Following an extensive investigation, former U.S. Attorney John Vincent announced a $10.25 million settlement in May 2001. The allegations included false claims to inflate reimbursement from Medicare, Medi-Cal and military health insurance programs.

Massachusetts General Hospital (Partners Healthcare)

Per the Boston Globe,

Massachusetts General Hospital has agreed to pay the federal government $1 million to settle potential violations of patient privacy laws, which occurred when an employee commuting to work lost patient records on the T’s Red Line two years ago.

Here is more detail about the alleged offenses:

Health information for 192 patients in Mass General’s Infectious Disease Associates outpatient practice was lost in the incident, including that of patients with HIV/AIDS. The documents included a patient schedule containing names and patient medical record numbers, as well as billing forms containing the name, birth date, medical record number, health insurer and policy number, diagnosis, and name of providers for 66 of those patients.

Note that Massachusetts General Hospital is not independent, but part of Partners Healthcare, which reported net patient service revenue of $1.5 billion in the most recent quarter, again per the Boston Globe. So this settlement amounted to about 0.00167% of the system's patient revenue.

So if a hospital engages in actions that violate the trust patients have that their information will be kept confidential, all hospital leaders have to fear is that their institution will eventually have to pay something much less than round-up error of their revenue, according to this settlement.

Summary

Again, the volume of participants in the ongoing march of legal settlements is a reminder of how pervasive bad behavior is in the US health care system. Remember that these settlements are in some sense the tip of the iceberg. They only indicate behavior that inspired legal action which was in turn was publicized. It is likely that for each behavior that eventually leads to a settlement, there are many behaviors that go unreported, or that cause no reaction.

It is interesting that sorts of bad behavior that formerly caused no official reaction are now leading to settlements. As noted above, there had been no recent legal actions against concentration of power in health care up to the United Regional Health Care System settlement.

However, like many of the settlements we have previously noted, the latest crop seem to have little deterrent power. The United Regional Health Care System settlement seemingly involved no monetary penalties whatsoever, only a promise of not to do it again. The Catholic Healthcare West settlement's monetary penalties were so delayed, occurring over 10 years after the actions in question, their deterrent power is highly questionable. The Massachusetts General Hospital (really the Partners Healthcare) monetary penalty was infinitesimal compared to the size of the institution's budget.

Furthermore, as in nearly every other case we have reported, no person who authorized, directed or implemented the actions in question had to pay any penalty, or suffer any negative consequence, or was even identified.

So while there seems to be some increased interest in addressing some kinds of bad behavior, like monopolistic practices, that heretofore generated no official reactions, regulatory authorities still seem loathe to even slap the wrists of the people whose aggregated actions are making our health care so expensive, so inaccessible, and probably of such mediocre quality.

Thus, in recent years, health care leaders, like leaders of financial service companies, seem to have impunity,  Up to now, they have been able to preside over all sorts of bad behaviors that help support their exorbitant remuneration without fearing any personal penalties.  As Charles Ferguson, the director of Inside Job, said when accepting his Academy Award last night, per MarketWatch,

Forgive me, I must start by pointing out that three years after a horrific financial crisis caused by fraud, not a single financial executive has gone to jail — and that’s wrong

After a slow-motion health care train wreck over the last 30 years, hardly any health care executives have even had to pay a fine, much less go to jail.

So I repeat, and repeat, and repeat: 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.

A Business-Based Prescription for Health Care

We recently posted about the travails of the leadership of Caritas Christi Health Care System in Massachusetts, culminating in the firing of the system’s CEO for violating the regulations he, himself, had signed about sexual harassment. This weekend, the Boston Globe ran a commentary on a prescription for “Giving Caritas a healthy future.” It was a prescription that said essentially nothing about the essence of health care, taking care of patients.

The writer was Ellen Lutch Bender, CEO of Bender Strategies LLC, a “healthcare consulting firm,”whose goals are “to enhance bottom line performance and increased market position for our health care clients as they plan for the future,” and a self-proclaimed “visionary.”

She advocated “hiring a strong, visionary, business-minded CEO ... [as] crucial to Caritas's long-term stability.” She asserted that hiring such a leader would be essential to support Caritas’ “healing mission,” but “that mission must be examined for what it is: a sprawling business in a complex, increasingly competitive, capacity-strained environment.” Furthermore, “the healthcare business demands specialized leadership and an organizational structure that supports innovative thinking and fearless decisions. Hospital CEOs must seize business opportunities when they arise.” Particularly, “the next CEO must possess exceptional fiscal management skills....” So, “the challenges facing Caritas argue for a CEO search beyond the traditional physician candidates.” And, “the church, the board, and the new CEO must craft a guiding philosophy balancing religious tenets, sensible business practices, and executive independence.”

Bender’s prescription never once acknowledges the real mission of hospitals, taking care of (mainly sick) people. To her, a hospital is only a “business” in a “competitive environment.” Her description of the ideal leader of a hospital requires no knowledge of health care, nor any commitment to the values of health care. In fact, Bender warned that a sufficiently “quick and nimble” leader would not be attracted “by a constraining, bureaucratic reporting system,” presumably one that actually required that leader to conform to a code of ethics, or put patients ahead of making “bold, foundational changes.”

This commentary makes very clear what sort of thinking pervades the current leadership of health care. Health care is a business, like any other, without any particular values or ideals that set it apart from manufacturing automobiles, or hauling trash.

This thinking has been going on at least since the 1980's, when Einthoven, one of the leaders of the managed care movement, called for breaking up the “physicians guild” and putting managers and bureaucrats in charge of health care in order to constrain health care costs. (See post here.)

Doing that, of course, has not constrained costs, not improved access, and not improved quality. It has lead to a huge increase in the number of health care managers, who now out-number physicians (see post here.) It has let top health care executives make a tremendous amount of money (see post here). It has given health care a few leaders hailed as “visionaries,” some of whom have been monumental flops. (See for example the case of the “visionary” CEO of Allegheny Health Education and Research Foundation, who ended up in federal prison, and whose health care system ended in the second-largest bankruptcy at the time in US history, here on pages 5-7.)

Maybe it’s time to get health care leaders who understand something about taking care of patients, and who put the mission first (and then let them hire savvy business-people to keep the finances in order).

ADDENDUM (July 16, 2006) Ms Bender also urged Caritas to follow the example of Catholic Healthcare West, which she described as "enormously succesful." Yesterday, the San Francisco Chronicle reported that Catholic Healthcare West just settled a lawsuit which alleged that the system "charged excessive and unfair amounts to the small percentage of patients who were not covered by Medicare, Medicaid, or private insurance, and then set aggressive collection agencies on them when they couldn't pay." These practices seemed to directly contradict part of Catholic Healthcare West's stated mission: "serving and advocating for our sisters and brothers who are poor and disenfranchised." Again, what may look like an "enormously succesful" organization to a businessperson may not appear to succesful to patients and physicians. I repeat: maybe it's time to get health care leaders who understand something about taking care of patients, and who put the mission first.

Lawsuit Alleges Catholic Healthcare West Over-Charged Uninsured Patients

The Los Angeles Times reported yet more allegations that hospitals charge higher "list prices" for patients least able to pay them, while giving discounts to insured patients. "Activist" K. B. Forbes, who heads Consejo de Latinos Unidos, in Los Angeles, launched a class-action suit against Catholic Healthcare West.
This is a not-for-profit health care system which claims to be "a system of 40 hospitals and medical centers in California, Arizona and Nevada. Founded in 1986, CHW is the eighth largest hospital system in the nation and the largest not-for-profit hospital provider in California." The system's mission statement is:

Catholic Healthcare West and our Sponsoring Congregations are committed to furthering the healing ministry of Jesus. We dedicate our resources to: delivering compassionate, high-quality, affordable health services; serving and advocating for our sisters and brothers who are poor and disenfranchised; and partnering with others in the community to improve the quality of life.

The lawsuit, however, charged that Catholic Healthcare West overcharged uninsured patients compared with what it charges those who have insurance. One plaintiff was Mirna Esupinian, who was billed $20,296 for a two-day hospital stay for gastritis. The lawsuit claimed that the "average private insurer" would have been billed $5,600, and Medicare, $3,994 for similar care. Estupinian took out a loan to pay her bill. The hospital suggested she raid her son's college savings to pay it.
Another plaintiff is Sergio Pantoja, who was billed $15,897 for a five-hour stay after he was in a hit-and-run accident. Again, the lawsuit claimed an average insurer would have been billed $4,451 for such a visit. Pantoja makes $9,000 yearly as a tattoo artist.
"Forbes said Catholic Healthcare West should have alerted these patients to charity care programs they may have qualified for and should have identified government assistance programs." "Forbes said the tactic preys on the fears of uninsured patients who want to protect their credit and have no idea what the regularly discounted rate is for a procedure."
We have previously posted about how not-for-profit hospitals frequently charge uninsured patients, who are often poor, much higher rates than insured patients. (See this link for a recent post about another suit by Consejo de Latinos Unidos, and an earlier post about the apparently ongoing congressional investigation of this billing practice.) This practice surely is yet another driver of high health care costs.
Worse, it directly undermines the hospital's charitable missions. In the example above, Catholic Healthcare West claims to offer "affordable health care," and to advocate for "our sisters and brothers who are poor and disenfranchised." How can the system's executives possibly square their stated mission with their bills to Ms. Esupinian and Mr. Pantoja?
Health care executives who actually try to fulfill their organizations' lofty mission statements would take us far down the road to the accessible, affordable, high-quality health care everyone says they want.