Whistleblowers Piping Up at Tenet

[pickledpepperRN]

http://www.calnurse.org/

http://www.calnurse.org/cna/seiuwatch/tenseiu80503.pdf

http://www.thestreet.com/stocks/melissadavid/10116568.html

Whistleblowers Piping Up at Tenet

By Melissa Davis

Senior Writer

09/30/2003 04:12 PM EDT

Tenet (THC :NYSE - commentary - research) has coughed up another hospital.

The shrinking health care giant, crippled by government probes and dwindling cash flow, is selling one of its four Houston facilities to help fund its operations. The two-campus Twelve Oaks Medical Center will now be owned by Hospital Partners of America, a private company once called OrthoNeuro that joins with physicians to buy and operate health care facilities that focus on high-margin procedures

HPA is paying $25 million, about one-quarter of the hospital's annual sales, for the facility.

"Twelve Oaks Medical Center will be a great addition to our company," declared HPA CEO Todd Johnson. "We are also excited about our physician partners in Houston who will be involved in the operations of the facility and believe that, together, we will create a very successful hospital system in Houston."

Haunted House?

But Twelve Oaks -- an underperformer in Tenet's Houston market -- is not necessarily the picture of health. Referred to by some hospital insiders as "Twelve Jokes," the facility is accused of employing the same business practices that have come back to haunt some of Tenet's star hospitals in California. Specifically, the hospital is suspected of performing unnecessary surgeries like those alleged at Tenet's Redding Medical Center and Western Medical Center. It is also accused of bribing physicians for patient referrals, an alleged practice that has already triggered several indictments at Tenet's Alvarado Medical Center in San Diego and government probes of at least six other southern California hospitals in the Tenet chain.

Tenet didn't respond to requests for comment.

In a letter fielded by the FBI early this month -- and now in other agency hands as well -- a whistleblower accused Twelve Oaks of abuses that, some say, are fundamental to Tenet's business model.

"The Federal Bureau of Investigation needs to extend its probe into the illegal activities of Tenet Healthcare to include Tenet Healthcare's Twelve Oaks Hospital in Houston, Texas, as part of the national investigation of fraud, illegal billing of Medicare, and illegal physician contracts," the whistleblower wrote. "Some of these, if not all, have been committed against the community by the current administration of Twelve Oaks."

The author went on to describe the alleged "performance of unnecessary invasive cardiac procedures ... based solely on the diagnosis of 'chest pain.'" The writer also accused the hospital of paying illegal kickbacks to 28 physicians "for work which was not performed by them" and then holding an emergency meeting to cancel the deals when Tenet's hospital in Redding first came under fire last fall. Finally, the whisteblower raised questions about the hospital's upcoming sale to HPA some three weeks before Tenet actually disclosed the transaction on Tuesday.

In particular, the author questioned a binding contract that allegedly guarantees hospital CEO Kerry Teel -- described as "a favored corporate child of Tenet" -- a $1 million salary going forward.

Teel "dealt with anyone who opposed the inclusion of [himself] , at this exorbitant salary, in the buyer's contract harshly and severely," the whistleblower stated. Previously, Teel has "laughed at the audacity of the staff that made complaints against him to the company's ethics line. ... This method of retaliation against people who complain against Mr. Teel is consistent with Tenet's philosophy of conducting business."

Changing of the Guard

By now, the powerhouse behind that ethics program -- former compliance chief and lead counsel Christi Sulzbach -- is already headed out the door. Last week, just hours after Tenet failed to supply sensitive documents requested by the U.S. Senate, Sulzbach suddenly announced that she would resign for the good of the company. To some, Sulzbach's exit signals new short-term challenges -- including fresh probes and management changes -- but a possible step toward long-term recovery in the end.

For now, Prudential Equity analyst David Shove continues to steer investors clear of Tenet shares that, he feels "do not adequately reflect the looming legal risk." He says the stock -- down 2.2% to $14.46 on Tuesday -- would be more properly valued at $10.

Meanwhile, he views Sulzbach as a crucial player in current and upcoming probes.

"In our opinion, the Department of Justice could use Ms. Sulzbach's apparent conflict of interest [for serving as both compliance chief and legal counsel] as leverage to secure her cooperation," Shove wrote on Monday. "As

In the meantime, Twelve Oaks will fall under new owners who are nevertheless familiar with the hospital's old ways. In addition to the CEO, a large group of physicians -- accused of enjoying illegal kickbacks in the past -- will apparently help run the facility.

Charlie Slaton, who recently presided over Tenet's Texas market, isn't totally out of the picture, either. He has joined MedCath, whose founder last year set out to replicate the MedCath (MDTH :Nasdaq - commentary - research) model -- emphasizing high-margin procedures -- by forming HPA.

Tenet itself has indicated that personnel changes at Twelve Oaks should prove minor despite the hospital's sale.

"Under the agreement with Tenet," the company announced, "HPA has agreed to offer employment to all active employees of Twelve Oaks Medical Center in good standing."

Counting Twelve Oaks, Tenet has now sold 11 hospitals it identified this year as noncore operations. It has closed two other hospitals and continues to seek a buyer for another.

Together, the asset sales have netted the company $630 million to help replace the rich cash flow that ended with aggressive billing practices that -- together with surgery activities and physician contracts -- are currently under fire.

[sjoe]

"Whistleblowers piping up at Tenet"

This would make a bagpipe orchestra sound tame if they really did it all at once.

Certainly are a LOT of ads for open RN positions at Tenet facilities these days, aren't there? Nobody can say they didn't bring it ALL on themselves or that they weren't clearly warned from day one.

[pickledpepperRN]

http://www.latimes.com/business/la-fi-tenet1nov01,1,2634115.story?coll=la-home-leftrail

Heart Care Scrutinized at 3 L.A. Hospitals

By Debora Vrana and Jonathan Peterson

Times Staff Writer

November 1, 2003

Signaling that the government is investigating whether unnecessary heart surgeries were performed at Tenet hospitals in the Los Angeles area, federal prosecutors have requested documents related to coronary procedures and billing practices at three medical centers in the region.

Tenet Healthcare Corp. said Friday that it would hand over the documents, including arrangements with cardiologists who practice at Daniel Freeman Memorial Hospital in Inglewood, USC University Hospital in Los Angeles and Centinela Hospital Medical Center, also in Inglewood and home of the Tommy Lasorda Heart Institute.

The three hospitals are among the larger and more profitable of Tenet's 40 medical centers in California. State records show that these facilities have had a substantial increase in cardiac services in recent years.

Officials at the U.S. attorney's office in Los Angeles, which is seeking the documents, declined to comment. Sources familiar with the investigation said prosecutors were focusing on whether heart patients received unnecessary treatments and whether Tenet hospitals improperly recruited physicians.

The request for documents dating to 1998 was made Thursday afternoon-exactly one year after federal agents raided a Tenet hospital in Redding and accused two cardiac doctors there of needlessly performing bypass operations and other procedures on patients. In August, Tenet agreed to pay $54 million and institute certain changes to settle those allegations, without admitting guilt. The two doctors have not been charged with any crime.

Tenet spokesman Steven Campanini said Friday that "we don't know the scope of what they are looking for." But he vigorously denied any suggestion that this was anything like the Redding case.

"It is inappropriate for anyone to speculate that this information request for documents is in any way similar to Redding Medical Center," Campanini said. "There is no subpoena, there was no raid. This is a letter requesting information."

Analysts said it was apparent that federal prosecutors were widening their investigation of the nation's second-largest hospital chain and that it could lead to a worsening of troubles and more legal exposure for the company.

Over the last year, Santa Barbara-based Tenet has been pummeled by multiple probes and lawsuits over its business practices, including its Medicare billing, treatment of uninsured patients and recruitment of physicians.

"This is potentially opening a Pandora's box-people in Southern California worried that they may have had some unnecessary heart surgeries," said Andreas J. Dirnagl, an analyst with Harris Nesbitt Gerard. "You had such a high profile case in Redding, and with this, people, whether rightly or wrongly, could start questioning heart procedures at all Tenet facilities."

Separately, Blue Cross of California, one of the state's largest health insurers, said Friday that it had data suggesting that doctors at Tenet's hospitals in Redding and Modesto performed a high percentage of unnecessary coronary bypass operations on Blue Cross members.

Dr. Woodrow Myers, chief medical officer for Blue Cross of California, said a review by independent cardiologists of 52 bypass operations at those hospitals had concluded that 85% of the surgeries at Redding had been unnecessary and that 59% at Tenet's Doctors Medical Center in Modesto had been unwarranted.

As a result, Myers said, Blue Cross this week stopped authorizing elective bypass operations at those two hospitals.

Steve Newman, chief executive of Tenet's California operations, said in a statement Friday that Blue Cross first raised these concerns Wednesday.

"They made serious allegations based upon a very small sample of cases," he said, noting that Tenet had proposed further patient safeguards while it reviewed those cases.

In recent years, Tenet has been building its cardiac programs at a number of its hospitals as part of a strategy to provide acute-care services to aging baby boomers. The programs have helped the company increase profitability, but its troubles at Redding have intensified scrutiny of many of its practices.

On Friday, the Senate Finance Committee threatened Tenet with a subpoena if the company did not provide certain information the panel had requested as part of its investigation of the firm.

In a draft letter obtained by The Times, Sen. Charles E. Grassley (R-Iowa), chairman of the committee, chided Tenet for withholding information related to a consultant's report on the cardiology program at Redding Medical Center.

The committee in September sought a wide range of materials from Tenet, including the findings of an independent consultant, Mercer Human Resource Consulting, that had been retained to review Redding's cardiology program.

The three Los Angeles area hospitals for which documents were sought did not have the kind of unusually heavy volume of cardiac procedures as at Redding. Still, their heart practices have been growing.

The number of cardiac operations at USC University Hospital, which is near the much larger L.A. County/USC Medical Center, more than doubled, to 442, between 1999 and 2001, according to the latest available data from the Office of Statewide Health Planning and Development.

Tenet said its USC hospital had a total of 24 cardiologists, 14 of whom were USC faculty members. The company said that in 2002 the hospital had performed 150 bypass operations.

Tenet said Centinela had a 30-bed heart facility with 33 cardiologists associated with it. Tenet bought the 370-bed hospital in 1997 and committed to building a major cardiology program, pumping $14 million into the Tommy Lasorda Heart Institute and hiring Dr. Robert Chesne, the former chief of Daniel Freeman's cardiology program.

Lasorda, the former Dodger manager, was treated at Centinela and in 1999 lent his name and support to the new state-of-the-art heart clinic. Centinela representatives did not return phone calls Friday, and neither did Lasorda's assistant.

Tenet said there were 145 coronary bypass operations at the Lasorda Heart center in the 12 months ended September. The company said it couldn't provide figures for previous periods. According to the latest state data, the number of bypass and other cardiac surgeries at Centinela jumped from 75 in 1999 to 179 in 2001, and total catheterization services more than tripled during that period to 1,809.

Times staff writer Don Lee contributed to this report.

[pickledpepperRN]

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=3733432

Tenet Healthcare Probe Widened

Fri October 31, 2003 11:28 AM ET

By Bill Berkrot

NEW YORK (Reuters) - Federal prosecutors have expanded their probe of Tenet Healthcare Corp., seeking information related to coronary procedures and billing practices at three Los Angeles-area hospitals over the past six years, the company said on Friday.

The embattled company, which last July received subpoenas about physician relocation agreements at seven Southern California hospitals, said the new request centers on certain cardiac physicians at the Centinela Hospital Medical Center, Daniel Freeman Memorial Hospital and USC University Hospital. The three hospitals are owned by Tenet subsidiaries.

Tenet spokesman Harry Anderson said he did not have specific details of what new information the U.S. Attorney's Office in Los Angeles was seeking, but he characterized the request as "rather extensive and very broad."

The company, which is based in Santa Barbara, California, and owns and operates 112 hospitals, said it will promptly assemble the requested information, which includes documents and records going back to 1998.

The latest unsettling news in a seemingly endless string of travails to hit the nation's second-largest hospital operator comes after a California appeals court turned a $9.2 million dollar judgment against the company into a $253 million award.

The company said Thursday it would seek a review of the appeals court decision in the case of the former executive who was fired 10 years ago.

"The bottom line here is that it's becoming increasingly apparent to me that the company is running out of operating and other strategies to turn this business around. The assaults just keep coming," said Sheryl Skolnick, an analyst for Fulcrum Global Partners, who lowered her rating on Tenet's stock to "sell" from "neutral."

Tenet is also under investigation by Florida's Medicaid system, and is facing a Department of Justice probe into Medicare billing, and a grand jury indictment of a Tenet-owned San Diego hospital for the use of physician relocation agreements.

Tenet in August agreed to pay $54 million to settle federal and California state charges of unnecessary heart procedures performed by two surgeons at one of its hospitals in Northern California.

The U.S. Attorney's office could not immediately be reached for comment and it was not known whether the latest probe involved further accusations of unnecessary surgeries.

Tenet's stock, which hovered around the $40 mark a year ago, was down 5 cents to $13.73 in late morning trade on the New York Stock Exchange.

Skolnick lowered her price target for Tenet to $9.40 based on the dire prediction of the break-up of the company.

"If they broke it up, sold the assets and paid off all liabilities, they'd end up with $9.40 a share in value," she said. (Additional reporting by Jed Seltzer)