Shock, NOT: Tenet to sell or shut hospitals and cut jobs

pickledpepperRN · May 5, 2003

Anyone remember the recent 60 minutes about the unnecessary open heart surgeries at a Tenet Facility in Redding, California?

Then ALLNURSES.com had a newspaper article posted with a photo inside that hospital with an ENORMOUS banner, "We support our doctors"

No "Sorry" from Tenet:

Published on Sunday, May 4, 2003 by Reuters

Critics Want More Corporate Remorse

by Chris Sanders

NEW YORK - When it comes to showing remorse for past misdeeds, critics say corporate America just doesn't get

it.

Whether it is allegations of biased research on Wall Street firms or rich pay packages for executives at corporations

in financial trouble, many U.S. companies are on the defensive.

Critics say corporate America has not learned its lessons, and that many top executives are still acting as if it were

business as usual.

"The most charitable way to look at these things is as examples of having a tin ear," said Henry Hu, corporate and

securities law professor at the University of Texas. "But I worry that these senior executives really haven't come to

terms with the fact that there were some real fundamental problems."

After Wall Street brokerages reached a $1.4 billion settlement with regulators this week, the head of investment bank

Morgan Stanley made public comments denying the pact raised any concerns for retail investors.

The remarks from Morgan Stanley CEO Philip Purcell drew a rebuke from SEC Chairman William Donaldson, who

warned Purcell that his words reflected a "troubling lack of contrition."

"It seems there just isn't a grasp of the gravity of what's going on," a regulator at the Securities and Exchange

Commission, who asked not to be named, told Reuters.

Wall Street executives are not alone in drawing criticism. Some high-powered executives are either overcome by

hubris, greed or perhaps ignorance about the extent of investor anger, critics say.

American Airlines, a division of AMR Corp., ousted Chief Executive Don Carty in April after an employee rebellion over

his failure to disclose a multimillion dollar pay package for senior executives approved while the airline fought off

bankruptcy. The largest U.S. airline had been also begging unions to approve huge pay cuts as it tried to slash costs.

John Bogle, founder of the Vanguard Group mutual fund giant, said Carty's actions reflect the "I" society.

"The moral standard is that if everyone else is doing it, and getting it, then I can get it too," Bogle said.

WALL STREET SETTLEMENT

Critics say executives involved in the Wall Street settlement, such as Purcell, need to watch their public statements

more carefully.

"It would be hard to stare a $1.4 billion settlement in the face and not, at least, appreciate the problem," said Donald

Langevoort, professor of law at Georgetown University.

Shareholder activist Herbert Denton, president of investment firm Providence Capital Inc. in New York, said, "Perhaps

it was hubris. It's the only way you can look at it."

Purcell isn't the only Wall Street executive to come under fire for remarks questioning the settlement. Recently,

Merrill Lynch & Co Inc. Chief Executive Stan O'Neal wrote in an op-ed piece in The Wall Street Journal that the

settlement was an effort to eliminate risk from the marketplace and that "if we attempt to eliminate risk -- to legislate,

regulate or litigate it out of existence -- the ultimate result will be economic stagnation."

O'Neal's article was scorned by New York Attorney General Eliot Spitzer, whose investigations, along with those of

federal regulators, led to the settlement.

Without naming O'Neal, Spitzer told a press conference; "So, Mr. CEO, and I read your article carefully, if I were you

I would reflect. What your company did, and what we have alleged about your company, is that you committed fraud."

Spitzer on Friday signaled that criminal charges against individuals could be on the way. "Just wait," Spitzer said in

an online forum held on the Washington Post's Web site. "The criminal actions may come in the future and the

number of prosecutors around the nation who are looking at possible prosecutions is significant."

Critics also accuse New York Stock Exchange Chairman Richard Grasso of bad judgment for attempting to put

Citigroup chief executive Sandy Weill on the exchange's board at the same time Citigroup was being investigated in

Spitzer's research probe.

Some boards of directors, possibly recognizing the dangers of old practices, have been reining in their executives.

"Boards are much more sensitive to it now than in the past," Denton said. "They have learned that if they don't

change, they will pay with their heads."

But Lawrence White, an economics professor at New York University, said little has changed other than "greater lip

service" to reform. "I fear this may not last because I don't see a lot of structural changes," he said.

pickledpepperRN · May 5, 2003

Sorry, this is personal for me. Tenet has lowered the standard of nursing care at my former "home hospital"

http://www.calnurse.org/cna/calnursenovdec02/tenethealthcare.html

Corporate Health Watch

Tenet Healthcare:

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

healthcare system.

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

hospitals.

"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

McVay.

"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

public."

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 http://www.calnurse.org

pickledpepperRN · May 5, 2003

http://www.seiu399.org/tenet/where.cfm

http://www.calnurse.org/cna/press/5503.html

pickledpepperRN · May 5, 2003

Why 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

JOURNAL

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

California.

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

care-related matters.

"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

shareholders.

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 [email protected]1