Sunday, CBS’ Sixty Minutes took a close look at Health Management Associates (HMA) a for-profit hospital chain that, according to its employees, has “relentlessly pressured its doctors to admit more and more patients—regardless of medical need—in order to raise revenues”
“We talked to more than 100 current and former employees and we heard a similar story over and over,” CBS correspondent Steve Kroft reported. Emergency room physicians were told “that if they didn’t start admitting more patients to the hospital, they would lose their jobs.” The orders came from the top:
With 71 hospitals in 15 states, HMA is the fourth-largest for profit chain in the country. Last year it raked in revenues of nearly $5.8 billion; half of that came from Medicare and Medicaid. In other words, taxpayers were footing the bill for a large share of those unnecessary hospitalizations.
Patients also paid. As one doctor observed: “If you are put into the hospital for reasons other than a good, justifiable medical reason, it puts you at significant risk for hospital-acquired infections and what we would refer to as ‘medical misadventure’” (i.e. “preventable medical errors)
: “Putting Heads on Beds” –An Old Story
The piece was shocking. But it is not a new story. It is an old story. To be more precise, it is a never-ending story. In Money-Driven Medicine: The Real Reason HealthCare Costs So Much, I profiled several for-profit hospital companies that did just what Health Management Associates has done: “put heads on beds”– even though the patients didn’t need to be hospitalized.
At Tenet, in Redding, California, patients weren’t just hospitalized, they underwent heart surgery. An investigation would reveal that in many cases, they “had no serious cardiac problems whatsoever.”
A FBI affidavit estimated that in one-quarter of all cases, Tenet’s two “rainmaker” heart surgeons were slicing open patients who should never have been on an operating table. Other doctors tried to alert the hospital’s administration. They were ignored.
Some of those patients did not survive. Others were crippled. All suffered psychological trauma.
HCA: Florida Governor Rick Scott’s Back-Story
In 1997, Health Corporation of America (HCA) made headlines when FBI agents swarmed HCA offices in five states, and found evidence that at HCA, executive salaries hinged on meeting financial targets such as “growth in admissions and surgery cases.”
The FBI also discovered that HCA had been keeping two sets of books—one to show to Medicare, a second that contained the real numbers. Ultimately the investigation would reveal that the hospital chain had been bilking Medicare while simultaneously paying kickbacks to physicians who steered patients to its hospitals
Just as at HMA, whistleblowers said that the directives came from the top. Rick Scott, who would later become governor of Florida, was the CEO of HCA. .(You will find footnotes documenting the details in Money-Driven Medicine (Harper Collins, 2006) .
In 2000 HCA finally settled with the government, pleading guilty to no fewer than 14 felonies— the biggest case of Medicare fraud ever. The company paid $1.7 billion in fines.
No one went to jail –probably because the Frist family (as in Senate Majority Leader Bill Frist) had founded the hospital and hired Scott to run it. (Some would say he was hired to do their dirty work.)
HCA settled with the government shortly before the Senator’s brother, Dr. Tommy Frist, (who served as HCA’s chairman) was scheduled to be deposed by the government’s attorneys.
Rick Scott was never indicted, and waltzed away with $10 million in severance. In 2009 when he led a committee to kill health reform, I told his story here on HealthBeat and wrote about him again when he became Florida’s governor.
For-Profit Hospital Chains: the Pattern
Tenet, HCA and HMA are just three examples of corrupt for-profit hospitals. After defrauding Medicare and hurting patients for years, these chains are caught, and pay a huge fine. No one goes to prison. Frequently they change the name of the chain, paint the front door, hire executives who are cronies of the former management team, and start all over again.
Update: Sure enough, HMA CEO Gary Newsome has announced that he will be retiring July 1. Newsome, 55, said in a news release that he is stepping down after being “called by the First Presidency of the Church of Jesus Christ of Latter-day Saints to serve as the president of its Uruguay-Montevideo mission. (It appears that he’s getting out of Dodge.)
”Newsome, who has been at the helm of the company since September 2008, took home $8.3 million in total compensation last year.
Meanwhile, the word on Wall Street is that HMA is now a takeover target. Bloomberg reports that, according to financial analysts, Community Health Systems (CMS), a sister for profit hospital chain is the most likely suitor
HMA and CMS have quite a lot in common: CMS has disclosed that it, too, has received requests for information from numerous law-enforcement agencies regarding its admissions policies, some of which are based at least in part on whistle-blower allegations
Unfazed by charges of wrong-doing, shareholders have sent HMAs share price soaring, up 25% in a week. (Typically, take-over rumors spur buying.)
You’ll find the rest of this post on HealthInsurance.org where I published a longer version yesterday. Just scroll down to these sub-headlines : “Why Do They Do It?” (where I explain what is wrong with the for-profit hospital model) and
“Non-Profits Follow the For-Profit Model” (the story of a non-profit Catholic hospital that insisted that doctors admit more ER patients. )