Shock, NOT: Tenet to sell or shut hospitals and cut jobs - page 2
new york times, march 19, 2003 tenet healthcare corp. says it will sell, close or shrink 14 of its 114 hospitals and cut jobs and expenses to help cope with an expected decline in payments... Read More
May 5, '03Sorry, this is personal for me. Tenet has lowered the standard of nursing care at my former "home hospital"
Corporate Health Watch
The seamy side of a dysfunctional system
In December, the nation's largest for-profit hospital corporation agreed to pay the federal
government $900 million dollars to settle out of court on charges the company committed
fraud against the Medicare system. Nobody at HCA is going to do time for cheating the
feds and the settlement cost is quite low considering the scale of the fraud but the news
once again focused public attention on the endemic corruption of the market-driven
Nothing illustrated better this seamy side of the system than the virtual cascade of
revelations concerning the county's second largest hospital corporation - Tenet
Healthcare. The same week HCA settled, federal officials carried out a daytime raid of a
Tenet hospital in San Diego. The evidence they sought was said to be related to physician
recruitment and referrals - which usually in such situations means kickbacks.
The San Diego raid was only the latest in a series of revelations concerning the operation
of the giant healthcare corporations. The source most cited in the media for the supporting
data was the groundbreaking analysis released by the Institute for Socio-Economic Policy
(IHSP). The institute studies revealed that Tenet:
* Received from the federal Medicare system payments or "outliers" nearly triple
the national average. Outlier is the technical term for Medicare reimbursements for
particularly costly medical procedures. Nationally, outlier payments comprise 10
percent of all Medicare reimbursements to Tenet. The national average for all
hospitals is just 3.5 percent. In California, where Tenet has recently been embroiled
in accusations of charges for unneeded heart surgeries, outlier payments average
14 percent of all of Tenet's Medicare reimbursements, compared to a statewide
average of 5.4 percent. Such payments accounted for 16.56 percent of all Medicare
reimbursements for Doctor's San Pablo and 13.58 percent for Doctor's Pinole.
(On December 31, the Wall Street Journal noted that Tenet's outliers make up
nearly a quarter of the company's projected income this year and are up $412
million over two years ago. The paper's editorial noted that "Tenet's earnings growth
and rocketing share price were driven by outlier payments that were bound to end
sooner or later, yet shareholders weren't let in on the secret).
* Set drug prices that were more than triple the national average - $44.8 million per
Tenet hospital compared to a national average of $13.7 million for all U.S.
hospitals. Tenet accounts for 6 percent of $76.2 million in drug revenues nationally,
even though the company holds only 2 percent of U.S. hospitals. The charges are
for billings to all payers, including Medicare and private HMOs, and include both
in-patient and outpatient charges. Tenet's sticker price on drug charges is 736
percent above its costs across the U.S. - and 1,037 percent above costs in
California. California hospitals accounted for seven of the top 10 Tenet hospitals in
drug charges that have nearly doubled over the past four years.
* Assessed charges to employers on workers compensation claims for employees
needing hospitalization in California at double the charge rate of other California
hospital systems. Tenet's median bill per hospital patient discharge was just under
$34,000 compared to a statewide median for all non-Tenet hospitals of about
$17,000. In individual counties Tenet's workers compensation charges far
surpassed other hospitals. The highest charges have been in Stanislaus County,
home of Tenet's Doctor's Medical Center of Modesto, and Shasta County, home of
Redding Medical Center. In both places, Tenet tripled the median for non-Tenet
"There is an enormous human toll from the outrageous markup on drugs by Tenet and
other hospital chains," said CNA President Kay McVay, RN. "It drives up health care
costs forcing seniors to choose between life saving medications and other basic needs,
encourages insurers to cut other patient services, and prompts employers to reduce or
eliminate health benefits."
CNA said that Congress must also take into account hospital drug charges in the current
policy debate on expanding access to prescription drugs. "Unless this critical component
of the drug cost issue is addressed, any reform on prescription drugs will fail," said
"This data raises some critical questions," said CNA President Kay McVay, RN. "Have
Tenet's aggressive pricing policies led to inappropriate qualification of some medical
procedures as outlier cases to generate higher profits? Does Tenet limit other medical
services to provide more staff and facility space for procedures that will generate outlier
payments? In what other areas of financial charges and reimbursements is Tenet out of
line with other hospitals?"
CNA is calling for:
* A full federal investigation into all Tenet's charges to and reimbursements for
Medicare and other payers.
* Stricter Medicare oversight of what has been extremely lax scrutiny
* Tougher penalties, including prison time, for corporate healthcare fraud.
Noting that Medicare's "outlier" payments to Tenet spiked dramatically after
implementation of the federal Balanced Budget Act - mandated cuts to hospitals, CNA
has warned of the consequences for patients if all complex hospital procedures are
jeopardized as a result of apparent excesses by Tenet. The problem goes beyond
Medicare, said CNA leaders. Many hospital's contracts with private insurers have clauses
similar to Medicare outliers that boost reimbursements when charges exceed a threshold.
As the year came to an end, the unfolding scandal involving Tenet Healthcare had
prompted or given new impetus to a number of national and state legislative actions.
The California State Senate Labor and Industrial Relations Committee has slated a
hearing on the evidence that Tenet has been overbilling on workers' compensation
charges. Responding to a call from Senate President pro Tem John Burton, the hearing,
slated for January 15 will also look into Tenet's markup on drug prices.
"The committee's decision to hold hearings into Tenet's practices is both timely and
urgent," said CNA President Kay McVay, RN. "We fully agree with Senator Burton that it
is important to get to heart of the matter.'
"RNs from throughout California can be expected to attended the hearing, she said and
are prepared to offer testimony on Tenet's policies "and their effect on patients and the
Meanwhile, the State Assembly Health Committee announced its plan to conduct a
hearing to probe charges that Tenet Healthcare and other hospital chains have
dramatically overbilled on pharmaceuticals and other charges. Committee Chair Dario
Frommer (D-Los Feliz) said the investigation would be conducted in consultation with the
state Attorney General and Department of Health Services. The Assemblymember cited
CNA/IHSP research and noted that allegations against Tenet and other hospital systems
"are alarming to many of us who dealt with the energy crisis last year. It appears that
some hospitals may have borrowed a page from the Enron playbook to game California's
taxpayers, health plans, and patients."
Welcoming the Assembly probe, McVay said, "The heartbreak of every Californian who
feels the effects of rising health care costs, who must make choices on whether to spend
limited resources on life saving medications, other needed health care services or other
basic needs, demonstrates the importance of this investigation and hearing," McVay said.
In a related development, Rep. Dennis Kucinich (D-OH) has called for the establishment of
a federal pricing commission on pharmaceuticals that would gather and report significant
pharmaceutical financial information from the nation's health care facilities. The proposed
agency would report drug information from all health facilities, including hospitals, nursing
homes and clinics. This would ensure that any patient would be able to find out how much
their hospital, for instance, paid for a medication and be able to compare that with how
much they are charged for that medication. Each facility would be responsible for returning
an annual survey to the Commission of the costs, charges and reimbursements for the top
30 most used medications.
"There is no question that drug prices are unaffordably high," said Kucinich. "What we
have learned from IHSP is that drug prices are a principal driver in fueling overall increases
in hospital costs and health insurance premiums. Pharmaceutical costs are making the
entire healthcare system more expensive and poorer quality for all patients. The promise
of prescription drugs was to make hospital cost diminish, but prescription drugs have done
exactly the opposite."
"Ultimately the source of the present scandal is not just the behavior of one rogue
corporation, Tenet Healthcare, but the inherent flaws of a market-driven healthcare
industry," said McVay. "Private hospital chains and private managed care corporations
squeeze each other to maximize profits, and both look for loopholes in Medicare or state
funds to generate higher payments, regardless of patient need. What is needed is not just
modifications in Medicare payment policies, but a new national dialogue, and overhaul, of
our market-driven healthcare system."
(More information on the IHSP findings, including charts, is available on the CNA
website at www.calnurse.org
May 5, '03Why ar Tenet execs not on "Most Wanted" or handcuffed as "bad boys"?
Wall Street Journal
May 5, 2003
Tenet, Under Fire, Forms Labor Pact With 2 Unions
By RHONDA L. RUNDLE Staff Reporter of THE WALL STREET
Tenet Healthcare Corp., a target of bruising attacks by
labor leaders in recent years, sought to quell that
criticism through a sweeping agreement with two unions
that have been organizing nurses and other workers in
its hospitals, especially in its home state of
The pact opens the door to the Service Employees
International Union and the American Federation of
State, County and Municipal Employees to organize
bargaining units at Tenet's 40 hospitals in California
and two in Florida. Hospital workers will be able to
freely decide whether to join one of the unions. They
in turn agreed to binding arbitration and a "no strike"
provision to resolve contract disputes.
For Tenet, based in Santa Barbara, Calif., the labor
agreement is part of a larger strategy to settle issues
with outside critics as it confronts serious challenges
to its reputation and financial future. The federal
government is pursuing criminal and civil
investigations of many of its hospitals, and Tenet's
profit will be sharply lower this year due to smaller
payments from a Medicare program that is being revamped
after revelations of outsize payments to the company.
The labor accord is similar to those reached with other
major hospital chains in recent years, but goes further
by establishing upfront a standard package of benefits,
including pay increases of as much as 29% over four
years. The idea is to take the most contentious issues
off the table to create a more cooperative bargaining
environment over scheduling, work rules, and patient
"This sets an example for the entire hospital industry
in some ways, by letting everybody work together on the
things that matter," such as improving the quality of
care for patients by minimizing the risk of errors and
infections, said Joyce Moscato, a spokeswoman for the
SEIU in Washington.
While the pact may soothe relations between Tenet and
the two national unions, it ignited a war with the
California Nurses Association, or CNA, a third union
that didn't sign the deal and has been aggressively
competing for members against SEIU and AFSCME.
"It's a clear violation of labor law to be effectively
bribing employees with the promise of increased pay
solely on whether or not they will be joining SEIU or
AFSCME," said Charles Idelson, a CNA spokesman. SEIU
operatives, he noted, already were distributing
leaflets to nurses in Tenet hospitals, saying if they
voted for CNA they would be forfeiting 29% pay raises.
CNA plans to file a complaint with the National Labor
Relations Board, he said.
By signing the union pact, Tenet is tacitly
acknowledging the success of unions in organizing
health-care workers in California in recent years.
While only about 8% of the company's 115,000 workers
belong to a union, and only 11 of its California
hospitals have bargaining units, unions have been
making steady headway in gaining members. They have
also badmouthed Tenet to influential legislators in
Sacramento and embarrassed its executives with picket
lines and other disruptions at the annual meeting of
The benefit package in the union deal calls for wage
increases of 8% in the first year and 7% in each of the
next two or three years, depending on timing of a new
contract. While the increases are big, Tenet said they
are comparable to annual increases paid to nurses and
some other health-care professionals in recent years
because of acute shortages.
Write to Rhonda L. Rundle at firstname.lastname@example.org