HCA, Giant Hospital Chain, Creates a Windfall for Private Equity - NYTimes.com - 0 views
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profits at the health care industry giant HCA, which controls 163 hospitals from New Hampshire to California, have soared
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The big winners have been three private equity firms — including Bain Capital, co-founded by Mitt Romney, the Republican presidential candidate — that bought HCA in late 2006.
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only a decade ago the company was badly shaken by a wide-ranging Medicare fraud investigation that it eventually settled for more than $1.7 billion
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35 buyouts of hospitals or chains of facilities in the last two and a half years by private equity firms
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Among the secrets to HCA’s success: It figured out how to get more revenue from private insurance companies, patients and Medicare by billing much more aggressively for its services than ever before; it found ways to reduce emergency room overcrowding and expenses; and it experimented with new ways to reduce the cost of its medical staff
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HCA decided not to treat patients who came in with nonurgent conditions, like a cold or the flu or even a sprained wrist, unless those patients paid in advance.
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In one measure of adequate staffing — the prevalence of bedsores in patients bedridden for long periods of time — HCA clearly struggled. Some of its hospitals fended off lawsuits over the problem in recent years, and were admonished by regulators over staffing issues more than once.
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Many doctors interviewed at various HCA facilities said they had felt increased pressure to focus on profits under the private equity ownership. “Their profits are going through the roof, but, unfortunately, it’s occurring at the expense of patients,” said Dr. Abraham Awwad, a kidney specialist in St. Petersburg, Fla., whose complaints over the safety of the dialysis programs at two HCA-owned hospitals prompted state investigations.
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One facility was fined $8,000 in 2008 and $14,000 last year for delaying the start of dialysis in patients, not administering physician-prescribed drugs and not documenting whether ordered tests had been performed.
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Claiming he provided poor care, the other hospital did not renew Dr. Awwad’s privileges. Dr. Awwad is suing to have them reinstated.
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“If you were a for-profit hospital with investors and shareholders,” said Paul Levy, a former nonprofit hospital executive in Boston unaffiliated with HCA, “there would be a natural tendency to be more aggressive and to seek more revenues.” Executives at profit-making hospitals are “judged in greater measure by profitability” than the administrators of nonprofit hospitals, he said.
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some of HCA’s tactics are now under scrutiny by the Justice Department. Last week, HCA disclosed that the United States attorney’s office in Miami has requested information about cardiac procedures at 10 of its hospitals in Florida and elsewhere.
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HCA’s cardiac business is extremely lucrative, and the Justice Department has requested reviews that HCA conducted that indicate some of the heart procedures at some of its hospitals might not have been necessary and resulted in unjustified reimbursements from Medicare and other insurers.
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Small and nonprofit hospitals are closing or being gobbled up by medical conglomerates, many of which operate for a profit and therefore try to increase revenue and reduce costs even as they improve patient care. The trend toward consolidation is likely to accelerate under the Obama administration’s health care law as hospitals grapple with what are expected to be lower reimbursements from the federal and state governments and private insurers.
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Columbia/HCA became the target of a widespread fraud investigation in the late 1990s, which led to one of the largest Medicare settlements ever.
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HCA wanted to attract more patients to its emergency rooms, and it did. Annual visits climbed 20 percent from 2007 to 2011. But while emergency departments are often a critical source of patient admissions, they are frequently money-losers because many patients do not have insurance. HCA found a solution: it figured out how to be paid more for the patients it was seeing.
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No one has accused HCA of up-coding, or billing for more expensive services that were not needed — one of the complaints made against it a decade ago.
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The acting head of Medicare is Marilyn B. Tavenner, a former HCA executive who left there in 2005 to become the secretary of Health and Human Resources in Virginia.
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Several former emergency department doctors at Lawnwood Regional Medical Center in Fort Pierce, Fla., said they frequently had felt compelled to override the screening system in order to treat patients.
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When the doctors failed to meet the hospital’s goals for how many patients should be considered emergencies, “they really started putting pressure on.”
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Regulators in several states have taken HCA hospitals to task over screening out patients too aggressively, including situations where the screening missed serious conditions.
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“Staffing is critical,” said Courtney H. Lyder, the dean at the UCLA School of Nursing and an expert on wound care. “When you see high levels of wounds, you usually see a high level of dysfunctional staff,” he said.
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HCA owned eight of the 15 worst hospitals for bedsores among 545 profit-making hospitals nationwide, each with more than 1,000 patient discharges, tracked by the Sunlight Foundation using Medicare data from October 2008 to June 2010.
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The hospital was cited twice by Florida regulators, in 2008 and 2010, for having inadequate numbers of nurses on its staff to oversee wound care for patients.