Making a Killing
HMOs and the Threat to Your Health
|Contents | 1 | 2 | 3 | 4 | 5 | 6 | Apdx 1 | Apdx 2 | Apdx 3 | Notes|
Buy the Book
Submit Your Story
The Death of Community Health Care And HospitalsTwo year-old Steven Olsen had one of those routine accidents that can happen to any child. He fell on a rotted tree branch while playing in the woods. A doctor had to remove a twig that went in his mouth and punctured his cheek and sinus. But a few days later, Steven grew feverish and lethargic. Twice, his parents, Kathy and Scott Olsen brought him to the urgent care doctor. Kathy told the medical staff, "Something is very wrong with Steven." But twice the urgent care staff told her not to worry. By then, Steven was rubbing his forehead, barely awake. On the third visit, Steven was finally admitted to the HMO-approved hospital, where Mrs. Olsen asked the medical staff, "Please do a CT scan."
A few years ago, under traditional, fee-for-service medicine, Steven would have gotten that scan. But Steven got his health care under the family's "managed care" HMO plan, as do 90% of those Californians fortunate enough to have insurance. The doctors and hospitals which contract with the HMOs know that every penny they spend on patients like Steven comes out of their own pockets, subtracted from the monthly per-patient fee paid them by the tightfisted HMOs.
So Steven's doctors told his parents a scan was unnecessary, ignoring his mother's concerns, and saving all of $800 the test would have cost. Three days later, the boy fell into a coma. The cause was a brain abscess. Expert physicians testified that had Steven received the scan when requested, he would be perfectly healthy today. The abscess could have been easily detected by a scan and then successfully treated.1
Hospitals were once the centers literally cradles of communities, centers of medical excellence where the injured were rushed to be mended and the emergency room was always open. The community hospital was the refuge for the patient in crisis. It was the last bastion of an ever vigilant society: always open, always ready to aid, the best of civil society and America's Good Samaritan spirit.
Hospitals defined communities, centered them, anchored them. Babies were born there and grandparents died there. Communities fundraised for their local hospital. Religious orders helped finance them. Today, for-profit outside corporations not community or medical ethics often control the hospital. The contrast is stark.
The most visible manifestation is the so-called "drive-thru" delivery, where mothers and their newborns were put out of the hospital as early as eight hours after birth, even though serious health risks are associated with such a premature discharge and experts recommend a forty-eight-hour stay. The death of caution at all levels of hospital treatment is the biggest consequence of for-profit corporations controlling hospitals across the country. As Steven Olsen and many others show, the dramatic downsizing has catastrophic results for human life, growth and health.
Avoiding negligent injuries like those arising from failure to treat Steven Olsen's brain abscess is no mystery. During the debate surrounding President Clinton's proposed universal health care system, an author of the landmark Harvard Medical Malpractice Study, Dr. Troyen Brennan of the Harvard School of Public Health, put it to Congress this way: "At the hospital level, the major risk factor associated with negligent injury is the total amount of resources expended in the care of patients…As the Administration attempts to attain control of costs, it must ensure that resources are distributed evenly. Otherwise patients hospitalized at relatively poor hospitals will be at much greater risk for negligent injury."3
Dr. Brennan was discussing potential dangers of a system run by government bureaucrats. Yet these very dangers have been realized in the corporate bureaucracy of managed care. Since profits motivate every decision, our nation has a system of medicine that is far less compassionate and every bit as bureaucratic as any governmental system could be.
Hospital beds are vanishing, facilities are closing, services are shrinking. HMOs are a major cause, as hospitals are transformed under the crunch of medical downsizing.
Dr. James Robinson surveyed the problem for the Journal of the American Medical Association. He found that, "between 1983 and 1993 hospital expenditures grew 44% less rapidly in markets with high HMO penetration than in markets with low HMO penetration. Of this, 28% was due to reductions in the volume and mix of services [less coverage], 6% was due to reductions in bed capacity [less beds], and 10% was due to changes in the intensity of the services provided [less surgeries, MRIs, etc]."4 In other words, HMO medicine means less hospital services or, at least, less specialized care.
Dr. Robinson writes, "rates of admission and lengths of stay have plummeted. Hospitals are merging, reducing bed capacity, and, in some instances, closing altogether. These economic dynamics are leading to a fundamental change in the organization of health care."
Is such a "reorganization" really bad?
The industry argues there are too many services and hospitals beds. Nurses, doctors and consumer advocates will tell you that the problem is rather that for-profit companies are taking unnecessary and unreasonable chances with patients' lives.
Patients themselves report serious problems. Consider the findings of a survey of 24,000 patients recently discharged from 120 hospitals nationwide:
William Speck, president of New York's Columbia-Presbyterian Medical Center said of the conclusions, "The whole system has become depersonalized. A lot of the decisions have not been made in the best interest of the patients, but on financial imperatives and that is a shame."7
It's important to ask, just how big is this problem? Early discharge and poor service may be inconvenient, but what is the actual impact on the public's overall health? Each year there are 80,000 deaths and 300,000 injuries in hospitals alone due to medical negligence, according to the most recent estimates of Harvard researchers.8 While these results are not specific to managed care, they certainly show that in the hospital environment, more, not less caution, is warranted. This prescription is antithetical to the corporate goals of ever-increasing profits.
What happens to all the patients not hospitalized?
In medical language, it is explained, thus: "Decreases in inpatients utilization were offset in part by a 75% increase in outpatients visits and a 168% increase in outpatient surgical procedures," Dr. Robinson reports.9
Hence the origins of the outpatient mastectomy a dehumanizing process by which women with breast cancer who undergo a mastectomy are released from the hospital the same day, often with no counseling. This "drive-thru mastectomy," amputate and go, is a serious problem for the average breast cancer patient, who is 63 years-old. When she comes out of anesthesia, this woman must deal with pain and trauma to both her body and psyche. In 1997, fourteen states banned the outpatient mastectomy. In 1998, two others followed suit.10 National Women's Health Network executive director Cindy Pearson asked of the practice, "What part of a man's body would they amputate in the same-day surgery?"11
In Napa California, an 88 year-old woman was rushed out of the hospital after a mastectomy, according to a report from the California Nurses Association.
"The surgery was a radical mastectomy performed on January 27, 1996 around 11:30 a.m.," said the woman. "When I came out of the anaesthetic, the social worker came to talk to me. She told me that I would be released from the hospital around 5 p.m. that same day and that I had to be sure someone would be there to take me home. I refused to leave."
Others came and spoke to her about the need to leave by 5 p.m.
"I still refused," she said. "I was nauseated and needed care. I was also due to come back to the hospital anyway at 9 a.m. the next day to see my doctor. I was 88 years and 11 months of age. I had no one at home to help me. I had to explain that my husband was legally blind and had to utilize hearing aids in both ears. I had to take care of him and now they were expecting me to care for us both immediately after I had major surgery. After much discussion I was ‘allowed' to stay a total of twenty-three hours which meant until 9 a.m. the next day. They basically got me out of their hospital as fast as they could."
Her ordeal didn't end when she got home. The woman was allowed only three home-care visits by a nurse.
"I had no one at home to help me with wound care and the emptying of drainage tubes from my surgical site," she noted. "I had to measure and record the amount of drainage. It was all very perplexing to someone without knowledge."
At one point, the wound became infected.
"This necessitated having to go to the emergency room for treatment," the woman continued. "I was sent to an attendant to change my dressings but she told me that she was unable to do so as she ‘had not had that experience.' I asked her how long she had been in health care and she said ‘I have no experience at all.' This did not inspire any confidence."12
Why the emphasis on downsizing when the costs to patients are so high? Dr. Robinson's research shows that capitation is at the heart of hospital downsizing. "In California, medical groups paid on a capitation basis are continuing to push down on hospital utilization, both through fewer admissions and shorter lengths of stay, thereby achieving the lowest rates of hospital use in the nation," Robinson wrote.13 Patients run the danger of being discharged too soon or never being admitted. In one astounding case that could have been written up in "Ripley's Believe it or Not," a man was turned away from an Oakland HMO emergency room even though he had a knife in his belly!14
Patients in need of additional hospitalization or rehabilitation in a hospital environment are also shunted by HMOs to a nursing home or skilled nursing facility, where there are fewer or no doctors and less costs. Such tactics are not confined to older people.
Stephanie Ulrich, a 23 year-old graduate student at Southwest Texas State University, was a teaching assistant when, on January 26, 1998, she fainted in front of a freshmen survey class. All she remembers is waking up in the hospital scared to death. A CT scan revealed what, the doctors believed, was a basilar artery aneurysm. But the hospital discharged her because they did not have the expertise to look at the films. So she went home.
"That night I called my aunt in Maryland and she told me to FedEx the films to her, so a neurosurgeon could read them," Stephanie recalls. "By Thursday, three days later, I was on a plane to Washington, D.C."
At the Washington, D.C. hospital, Stephanie's aunt tried to get approval from Stephanie's HMO, but the company denied her plea. Stephanie's aunt called Stephanie's primary care physician in Texas for a referral for an angiogram that would confirm an aneurysm, and for admission to the hospital. He would not issue the referral because he said he was not informed about the hospitalization, even though Stephanie and her aunt had called his office the day she fainted and informed a member of his staff. Because Stephanie was outside the HMO's network, and her primary care doctor would not issue a referral, the HMO would not okay her admission to the hospital or the angiogram.
Luckily, Stephanie had secondary insurance because of her mother's job. This HMO approved the angiogram, which revealed that Stephanie needed immediate brain surgery.
The following day, Friday, January 30, 1998, Stephanie had the surgery, then spent three weeks in intensive care. The doctors at the hospital wanted Stephanie to be transferred to the National Rehabilitation Hospital (NRH) at the end of February. But her mom's HMO would not approve the doctors' request. She had to go at it alone.
Stephanie was discharged from the rehabilitation hospital on April 25. On Monday, April 27, she started a five-day a week, seven hours a day rehabilitation program. She was in that program for ten weeks and is currently doing outpatient therapy twice a week.
"My mother's HMO is still fighting with us over whether to pay the rehabilitation hospital, because they feel I am not rehabilitable," says Stephanie. "Throughout this whole illness, it has been an uphill battle with the insurance companies. I was at the lowest point in my life, and the insurance companies kicked me in the back. They had no right to do what they did to me and I pray this will not happen to anyone else. The last thing anyone should worry about is who is going to pay their hospital bills. They should concentrate on getting better and not on fighting the insurance companies. Without the help of my family and friends, I may be dead."
Stephanie's aunt Judy said in May 1999 that, "if Stephanie had not called us, I think that child would be dead today. If we were not there with the right resources and persistence, she would not be back in graduate school today walking, talking and eating. She even just got her driver's license back."
Edna and Nicole Asquith of San Jose, California have a similar story.
Nicole's 56 year-old grandmother died after being dumped in a "skilled nursing facility" and ignored by her HMO doctors.
"My three-year-old daughter would be spending her days with Grandma, had Grandma's HMO not rushed her to a skilled nursing facility to save a buck," said Edna.
"My mother was unconscious in the intensive care unit for three-and-a-half weeks, at times near death, on and off a ventilator with pneumonia and a liver condition," said Edna. "On the day she ‘came to' she was transferred out of ICU and then immediately to ‘one of the best skilled nursing facilities (SNFs) in the area.'"
Edna spent the whole day with her mother at the SNF getting her settled, arranging for physical therapy, etc.
"We were so excited she was finally coming home in a couple of weeks," Edna recalls.
But on her first evening, she developed a 104-degree temperature. Edna was on the phone to the doctor, expressing her concern.
"I called an ambulance to take my mom back to the HMO hospital because her fever would not come down and the ‘nurses' didn't know what to do," Edna remembers. "The HMO emergency room doctor said my mom would have to go back to the SNF that night because she was suffering from a simple urinary tract infection."
On day two, Edna was called by a "nurse" who stated that her mom had no pulse and she didn't know what to do. The "nurse" said she called 911 and that Edna better rush to the hospital. At the hospital, the paramedic told Edna the "nurse" could not explain in understandable English what was wrong with Edna's mother.
"My mom didn't die that night," Edna said. "She suffered with sepsis for a while, then died at home at the ripe old age of 57. If the sepsis had been treated early, instead of being ignored, she would probably be alive today."
Hospitalized patients, unfortunately, rarely have the help they need to navigate an increasingly less caring environment. Hospitals have become outright dangerous places, where patients must take extraordinary steps to protect themselves.
Suzy Lobb's advice is simple: "Never stay in a hospital alone." Lobb recommends that a friend or family member remain by your side in the hospital, whether the hospital likes it or not.
In a tragic example of the crisis in American hospitals, Lobb's husband, Dwight, died on his forty-seventh birthday.
"He lay unattended, neglected and forgotten at an HMO hospital and quietly bled to death," Lobb says. "In spite of deteriorating vital signs and complaints of severe pain and abdominal spasms, no physician was called in. Nursing cut-backs on the floor, due to corporate cost-cutting, prevented a nurse from even checking on Dwight. At the most critical time, after he complained of excruciating pain, Dwight went unmonitored for over an hour and a half. When he finally was checked, he was dead. In less than five hours after leaving the recovery room from a routine elective surgery, my husband died from internal hemorrhaging."
One of the most troubling aspects for Lobb was that the night before, when she was leaving the hospital, a nurse told her they were short-handed and just couldn't get around to do everything they needed to do.
Suzanne says, "I believed in my heart that he was in the very best place he could be; that he was with the caregivers. And the feeling of betrayal that I have, I will never get over. My husband was denied the most basic of care, and it cost him his life."
Nurses, the best witnesses to hospital downsizing, condemn it.
"We no longer talk about quality care; we talk about minimally safe care," Kit Costello, president of the California Nurses Association, told 60 Minutes. "HMO after HMO has restructured the way in which care is provided to patients in order to cut costs. This involves shortening hospital stays, treating patients on the outside, and shifting more care onto their families."15
Nurse staffing levels have been decimated, and the policy is both perilous and pound-foolish. A 1997 study showed that fewer registered nurses translates into both longer hospital stays and more complications such as bedsores and infections.16
Registered nurses are a lifeline for the seriously ill patient. As in the case of Dwight Lobb, when a nurse is not available to respond, the consequences can be catastrophic.
"There's the old common-sense adage, ‘You don't run with the scissors'," says Barry Adams, a nursing activist from Boston. "When a nurse has ten patients, fifteen patients, it is not conducive to safe nursing practices. When you're…just pouring pills, just one wrong pill can be the end. Do you know how quickly wrongly administered penicillin can kill somebody?"17
Chronic understaffing is a threat to public safety. In the drive to penny-pinch and satisfy HMOs' demands, hospitals replace registered nurses with aides who have less training and fewer skills, often undermining the quality of care and endangering patients.
Consider a Wall Street Journal "Work Week" account, where the paper of record for HMO investors takes pride in a practice that would send shivers through any hospital patient:
"DAILY GRIND: Hospitals once called the job ‘housekeeping,' but now ‘service partners' such as David Ceronsky toil hands-on with patients. On the night shift at the Fresno, Calif., Kaiser Permanente emergency room, he wheels patients to their rooms, feeds them, records what they eat and responds to their calls. Code blue heart attack? Mr. Ceronsky, 37, who earns top pay of $10.11 an hour, drops his mop to perform CPR if he is the closest at hand."18David Ceronsky was part of a Service Employees International Union (SEIU) negotiating team that cut an agreement with Kaiser in Northern California for other so-called "service partners" to respond to patient call lights. The qualifications are simply a high-school diploma or equivalent and experience in housekeeping, food handling, transporting supplies, or decontaminating containers.
As for training, forget nursing or medical school.
"Employees shall be given on-the-job training necessary to meet the minimum qualifications of the posted position," according to Kaiser's letter of agreement with the union.19 Of course, emergencies are routine in hospitals and employees are now called upon to perform duties beyond the "posted position."
Unfortunately, the fewer nurses are busier and busier.
Judith Shindul-Rothschild, a professor at Boston College's nursing school, says it's as if nurses are leaning over patients on an accelerating conveyor belt and each "speedup brings them closer to the brink of chaos."20
What are the consequences for patients?
Too many hospitals can become death traps.
Marilyn Pon, a registered nurse (RN) in Berkeley, CA, says patients have had strokes unreported in a timely fashion, because there were too few qualified people to check on patients regularly. "They lay there for hours before anyone noticed."21
Interviews by the Boston College School of Nursing with Massachusetts nurses attributed fifteen patient deaths to inadequate nurse staffing during 1994, while similar surveys in previous years found no such deaths.22
Complaints from California RNs to the Board of Registered Nursing regarding unsafe practices for patients swelled to record numbers during 1996.23 California, which has the greatest percentage of its population in HMOs, not surprisingly, also ranks 49th in the United States in the rate of registered nurses to patients, according to the Census and Commerce Department data.24
The frequency of staffing shortages is frightening. In a single month, Lucille Packard Children's Hospital at Stanford was cited forty-two times for inadequate staffing, then the next month thirteen different times for staffing shortages in its Intensive Care Unit for premature babies and other high-risk infants.25
California's Sutter Roseville Medical Center was cited by the Department of Health Services for twenty-six separate incidents of unsafe staffing in its Cardiac Intensive Care Unit and Intensive Care Unit during a three month period.26
In August 1998, for the third time in two months, Kaiser Permanente was cited by California health officials for the unsafe and illegal use of unlicensed staff on patients during surgery. Following onsite inspections and interviews with staff, the California Department of Health Services (DHS) described incidents of an unlicensed technician engaged in such practices as suturing deep tissue wounds, pounding metallic devices into bone, and cauterizing veins.27
In one case, an unlicensed orthopedic assistant placed a retractor directly in a total hip wound. The DHS citation found this "is dangerous since a person other than a surgeon might not know where the nerves are and where to place the retractor. A retractor (an instrument used to hold back tissue) could cause nerve damage if improperly placed, especially during total hip surgery."28
John Daly, the DHS official who oversaw the investigation, said that in his ten years as a regulator he had never seen a case such as this, where a technician clearly exceeded his scope of training. "These were clear violations of state regulations and the regulations are there for a reason," he said.29
Accounts of patients who have paid for hospital downsizing are chilling. The California Nurses Association's Patient Watch program reported one letter it received from a friend of a 911 emergency care dispatcher who had taken a patient's urgent call. The friend wrote, "She needed immediate help as she was bleeding and couldn't get it to stop. The thing that flabbergasted him was the origin of the call: a patient room at a local hospital. She had tried again and again to summon help with her call bell, but no one would come."30
A Northern California resident recounts in another Patient Watch letter: "My experience involved several staff members with no clinical background or limited experience with the protocol of chemotherapy…The IV-tubing for the implanted port-a-cath access device became disconnected allowing the drugs and blood to spill onto the bed and floor. It took several minutes for someone to respond, only to inform me there was nothing they could do but contact my nurse. To my dismay, it was several minutes (more) before my nurse responded, but I had already connected the tubing and cleaned the blood from the floor."31
Dan Lake, an emergency medical technician from Vacaville, California, came up against the industry's cost-cutting practices when his wife went into premature labor, and later when his infant son Daniel had to stay in the hospital for several months.
In 1991, Dan's wife Cindie was six-months pregnant when she started having severe chest pains and headaches. When she called her HMO doctor, he recommended that she drive herself to the hospital. Dan, a trained emergency medical technician, saw that his wife was in too much pain to drive, and ordered an ambulance. The HMO doctor refused to pay for the ambulance until Dan insistently demanded that the doctor look at Cindie before making a final decision. When the HMO doctor saw Cindie's state, he authorized payment.
Cindie gave birth to their son Daniel at twenty-four weeks. He needed care around the clock.
"If your kid is in the hospital, you might as well bring a suitcase," Dan said.
Lake found the hospital wards so understaffed that registered nurses had to take care of four intensive-care infants at once. Basic care could not be performed under this skeletal staffing.
"We had things happen like being told to pay for a babysitter to watch our son if we wanted to leave," said Lake. He even monitored the baby next to his, whose parents both had to work and could not watch their child full-time. Dan says this situation is common, and he knows several people "who have lost their jobs because the understaffing in hospitals forced them to go take care of their children in the hospital."
"I think because we were so persistent is part of the reason why he's here today," said Lake, about his son Daniel's treatment. "And if we would have left him there, I don't think he would be here today. With us there were times where the poor nurse now it wasn't her fault, because she was so busy she'd poke her head in and say, ‘Did you take his vitals?' So I was taking my own son's vital signs to give back to them to chart, because she didn't have time."
The tragedies are not just anecdotal.
A 1996 national survey of 7,500 RNs by Boston College School of Nursing Professor Judith Shindul-Rothschild found that 60% noted a reduction in the number of RNs providing direct care, and 40% reported substitution of unlicensed personnel for RNs. The study found disturbing increases in unexpected patient re-admissions, complications, medication errors, wound infections, patient injuries, and patient deaths. More than one-third of RNs said they would not recommend a family member receive care in their facility.32
Downsizing shifts more risks onto patients and away from the hospital system designed to assume them.
Numerous studies in the 1980s and early 1990s, a period in which RNs typically comprised at least 80% of nursing staffs, documented a direct correlation between safe RN staffing levels, lower mortality rates and other positive patient outcomes.
An analysis of studies by Patricia Prescott, RN, Ph.D., in the magazine Nursing Economics, makes clear the power of Dr. Brennan's argument that resources have a profound role in determining patient outcomes:33
Gradually and unfortunately too late for many a consensus is building about the harm done by staff cutbacks. Rather than allowing themselves or their patients to be downsized, many nurses with high ethical standards are leaving their practices. This has created a devastating ripple effect. An internal memo at Mercy Healthcare Sacramento in July 1998 documented an "ever-increasing number of vacancies" in nurse staff positions that it could not fill. The voluntary departure of hundreds of RNs was the major problem. In exit interviews, many nurses said they were leaving due to staffing that was "unsafe; too much required; not enough staff."35
Kaiser Permanente's Northern California nurse recruitment manager told NurseWeek in February, 1998 that "the recruitment infrastructure was demolished during downsizing [because of] several years of not providing opportunities to new grads. It's kind of like nature, you can't reproduce during a drought."36
When good nurses disappear from the bedside, patients pay the price. A sampling of the human consequence can be seen in the following excerpts of letters received from patients, their families, and Registered Nurses, in response to the California Nurses Association's Patient Watch advertisements.
How have centers of healing turned into potential health hazards? In the hospital delivery game, fewer and fewer players are controlling more and more patients' health care leading to competition on the basis of cost-cutting and care-cutting, not medical innovation.
In the Sacramento, California area, for instance, seven large medical groups have three-fourths of the region's 1,000 primary care doctors. Three hospital systems account for about 80% of the inpatient care. Moreover, patients face increasing problems gaining access and entrance to hospitals because the "gatekeepers" are HMO agents. Because the Sacramento-area doctors are fully capitated, they have cut the hospital use by 40% according to a recent study.38
Skimping on care is not the only crisis. The entire physical infrastructure of the nation's hospital system is being eroded. The community hospital and the open emergency room are disappearing just as quickly as the family doctor and the registered nurse from the bedside.
An Illuminating Model of Greed
The community hospital was often started by religious and civic-minded groups as a charity to serve all comers. Corporations are now taking over. There were 200 corporate takeovers of non-profit hospitals between 1990 and 1996.39 While religious orders founded hospitals in their quest to aid the needy and build community, for-profit corporations have the bottom-line as their agenda.
What has been lost?
While physicians who worked at the non-profits hardly took the vows of poverty, the orders who founded the institutions did. The hospitals were run in the spirit of taking all comers, mending all wounds. federal law reflected these mores requiring that emergency rooms not turn away any patient in need of care without stabilizing them, regardless of a patient's ability to pay.
And the community hospital was the place where civil society and the medical community intersected, each moderating and mediating the other, collaborating on an appropriate balance of public and private, the professional and the civil. The boards of community hospitals are typically chaired by non-physicians, often nurses or community leaders. The goal was not profit but service.
Today, the giant for-profit chains that take over community hospitals dismantle beds and services, in some cases close whole facilities, and make huge profits.
With 355 hospitals at its peak, Columbia/HCA is the nation's largest for-profit hospital chain, and the clear leader in downsizing hospital beds. It also currently faces federal indictment on fraud charges. The company recorded $1.9 billion in profit during 199540, feasting on the community wealth charitable organizations have built up over decades. Columbia is alleged to have cheated communities out of medical services and, in its fee-for-service business, the taxpayer out of money for medical services never rendered.
John Leifer a regional senior vice president for Columbia/HCA in 1994 and 1995 helped arrange takeovers. He's now a former employee of the Columbia/HCA system.
"I think that any time a not-for-profit community-based facility sells to a for-profit, the community suffers," the former Columbia executive explains. "I think that the needs of Main Street are incongruous with the needs of Wall Street. The community-based hospital has, as part of its mission, meeting the total health care needs of the community, and it doesn't have an obligation to pay a return on investment to its shareholders, whereas a for-profit has a very different motivation. They have earnings expectations on the part of their investors, and they have earnings expectations on the part of Wall Street analysts."41
Columbia became known as the octopus of the hospital world, a take-over king whose growing empire has sparked many local wars.
Attorney General of Michigan, Frank Kelly, is one of the Columbia/HCA resistors. Kelly stopped the Columbia takeover of a Lansing non-profit hospital, and the court agreed with him to scuttle the deal.
"What I'm afraid is going to happen here with these profit hospitals coming in is that they're going to take these facilities," said Kelly. "They're going to take all of the profitable businesses, they're going to take all of the cream off of the top, and then they're going to leave the charitable work, and the poverty work, and all of the difficult cases for some other institution, while they make a profit."42
The industry's largest trade magazine could not help noticing the trend: "The effort to convert assets created by civic-minded citizens and religious orders to the benefit of corporate owners and shareholders has created a furious industry debate in recent years."43 The debate, however, needs to be moved to the public, which still expects that when patients are admitted to a hospital they are in the care of nuns, not the custody of corporate bosses.
The rapid consolidation of the industry is squeezing patients further and further. At the hospital level, it comes down to who will be there and how quickly when a patient, like Dwight Lobb, presses his call button.
In 1996 Columbia/HCA bought the then-not-for-profit San Jose Medical Center and Good Samaritan Hospital. At the two San Jose hospitals, Columbia let go of sixty-eight registered nurses, 12% of the nursing staff.44
When Lehrer NewsHour reporter Jeffrey Kaye talked to a group of nurses at the facility, they said their patients' lives were in jeopardy:
MELINDA MARKOWITZ, Columbia Good Samaritan Hospital: We are required to have more patients than we can adequately and safely take care of.
JEFFREY KAYE: Melinda Markowitz has been at Columbia Good Samaritan Hospital for nineteen years.
MARKOWITZ: The potential is there for life-threatening situations, yes.
KAYE: Elaine Legg was so worried about staffing conditions in San Jose Medical Center's emergency room that she left her job.
ELAINE LEGG, Registered Nurse: The staffing was unsafe. It was an unsafe setting.
KAYE: Celeste Lange has worked in Columbia Good Samaritan's intensive care unit for twenty years.
CELESTE LANGE, Columbia Good Samaritan Hospital: You have that kind of living-on-the-edge feeling when you're in there, because, you know, you're kind of you may or may not be able to manage what comes along. There's no guarantee.
KAYE: Dr. Kamal Modir echoed that feeling of living on the edge. He's been a surgeon at Good Samaritan for twenty-five years.
DR. KAMAL MODIR, Columbia Good Samaritan Hospital: Many times we've got close to disasters.45
When hospitals close beds, wings, and downsize services, patients pay. Is it by design?
Former Columbia Executive Marc Gardner, now a whistleblower for the government's case against Columbia, explains, "America needs to know there's a dark side to running a hospital, and it hasn't really been talked about. Let me tell you, this is a ruthless, greedy company period. Employees are the largest operating expense. Cut that to the bone. Cut nursing to the bone. I mean, cut to as low as your conscience will allow. We cut it so low that my wife and I had a plan. If she ever got sick and required hospitalization, she'd go to the hospital across town."46
Gardner, a 35 year-old former vice president at Columbia's Sunrise Hospital in Las Vegas, said candidly about Columbia's attitude regarding cuts in the hospital's neonatal unit, where sick newborns are treated: "Babies don't complain too much. A baby doesn't know if they are getting bad care."47
Such decisions allowed Sunrise, a flagship hospital for Columbia, to take in revenues of nearly $1 billion annually.
Enormous earnings are the reward for hospital corporations that downsize care, nurses and beds under HMO medicine. But patients pay the price. And taxpayers and whole communities pay too.
In 1997, FBI agents descended on Columbia offices across the nation with search warrants and seized over three million documents. Numerous whistleblowers had come forward to bolster various federal indictments against the company for widespread fraudulent billing practices of the government's Medicare and Medicaid programs.
Florida is the center of the probe. Four Columbia executives in Florida have been indicted and two other executives outside the state have been fired.48 Top managers including Chairman and founder Richard Scott stepped down quickly after the first raids, and the company went about transforming its image. Scott resigned in 1997 with $10 million in severance and $269 million in stock.
The company claims it is now dedicated to rebuilding and cleaning house of corruption. But the damage done to communities is just emerging from the trail of documents left in the scandal's wake.
Columbia allegedly cheated the taxpayer of billions of dollars by distorting federal expense claims for reimbursement. How did the company cook its books?
According to a New York Times investigation, documents show that some hospitals charged the government for costs that were not reimbursable such as advertising dollars. The hospitals allegedly set money aside to cover the costs if discovered. If the government noticed a discrepancy, the hospitals would repay the money without a fine or interest penalty. If the inflated numbers were not noticed for two or three years, the money would be considered profit. Other allegations under investigation by the government include "upcoding" charging for a more expensive treatment than the one rendered.49
In addition, the Times reports outside accountants such as KPMG Peat Marwick knew that Columbia was cheating the government, and in some cases helped. KPMG was named in a whistleblower lawsuit that contends the firm helped Columbia hospitals create secret reserves that would be used to provide refunds to the government if Columbia's deception was discovered.50
The records at one Arkansas hospital were reportedly stamped, "Confidential. Do not discuss or release to Medicare auditors."
Such "misrepresentation of costs has occurred throughout the for-profit hospital industry," according to the Times. "Hospitals now owned by Columbia reportedly distorted costs when they were owned by several other companies, including Healthtrust, Basic American Medical and the Hospital Corporation of America."51
Whistleblowers close to the Columbia case say they expect the federal government to announce the largest fine in history.52
The billions of dollars involved in the swindle is just one example of the money pulled out of communities by Columbia and other for-profit hospital chains when they take over community hospitals and close beds.
There is another way that companies like Columbia can cheat the taxpayers. When a chain like Columbia buys a not-for-profit community hospital, it must value the assets it is buying, then establish a foundation to continue the non-profit mission because of the tax-free dollars that went toward building up those assets.
But like the bills Columbia submitted to the government, these assets' true value are often distorted this time undervalued. For-profit companies have bought up community hospitals at fire-sale prices. Communities have been cheated according to many.
Michigan Attorney General Frank Kelly could never compel Columbia to produce information about the value of the community hospital targeted for acquisition that is how he got a judge to stop the takeover. When Columbia took over Timken Mercy Medical Center in Canton, Ohio, the board of trustees composed of local businessmen were summarily fired because they asked questions similar to Kelly's.
Robert Rownd, a businessman, was chairman of that board. He explains: "We all looked upon the medical center as a community asset. It was put here by the community. It was funded by the community. It has a lot of sweat and toil from the community. We weren't able to get the information that we needed in order to determine whether it was in the best interest of the community…there were a number of trustees who were asking the same questions that I was asking." They were all fired on the same day after asking questions such as how much the hospital was going to be sold for, to whom it would be sold, why everything was kept secret.53
Columbia's rap sheet in communities across the nation shows a pattern of thievery usurping services and value. Mike Wallace of CBS's 60 Minutes reported of the Columbia record in October 1996:
August, Georgia When Columbia took over August Regional Hospital in late 1993, charity care dropped by about a third the next year, according to state records.The plan behind Columbia's acquisitions was clear. Richard Rainwater, co-founder of Columbia/HCA, admitted, "The day has come when somebody has to do in the hospital business what McDonalds has done in the fast-food business and what Wal-Mart has done in the retailing business."55
"Do we have an obligation to provide health care for everybody?" former Columbia CEO and co-founder Richard Scott opined. "Where do we draw the line? Is any fast-food restaurant obligated to feed everyone who shows up?"56
Under federal law, the answer is hospitals do have an obligation to treat all comers who are seriously ill. Under the ethic of investor-owned hospitaling, the community does not count. When health care is a business, like fast food, communities can be starved.
Whistleblower Marc Gardner has discussed how the hospital giant he worked for turned the uninsured away in apparent violation of the federal "take-all-comers" law. One homeless man with pneumonia, for instance, was discharged without having any tests and died an hour later on the hospital lawn. Another elderly homeless man was also released without testing. He went down the road to a Catholic hospital, where a brain hemorrhage was found.57 Such downsizing falls under the same type of justifications for cutbacks in the neonatal intensive care unit: "babies don't complain too much." After all, homeless men don't pay premiums.
While Columbia allegedly skimped on patients, it spent big bucks on advertising. Columbia spent nearly $200 million for advertising in 1995 and 1996 the largest expenditure in hospital-industry history. In 1996, Columbia spent more than $1,567 per bed in advertising, or $106 million total.58
But it did not stop there. To corner the market, Columbia sought to kill off all competing community hospitals. One Columbia administrator Jon Trazona reportedly wrote to surgeons in Fort Pierce, Florida, "I pledge to you that Columbia/HCA will utilize all appropriate resources to insure the failure of any competing surgery center in our community [emphasis in original]."59
CEO Richard Scott himself allegedly told one hospital chief in handwritten comments on his evaluation of a rival hospital, "Don't let St. Mary's attract your patients." According to Marc Gardner, despite federal prohibitions on physician self-referrals, Columbia had physicians buy shares in the hospitals where they worked and paid doctors thousands in monthly fees to bring patients in the door.60 This cut-throat competition has a debilitating effect on communities and an inflationary impact on patient bills.
First, Columbia appears to have inflated prices and padded its Medicare billing. In one Columbia-owned hospital in Georgia, the average stay for a stroke victim cost $14,582, while a similar public hospital charged $6,735.61 The New York Times reported "Medicare had paid far more for Columbia patients receiving outpatient services than if care had been billed at the state average."62 So the taxpayers are cheated twice.
Second, the for-profit, not-for-patients ethos affects non-profit and community facilities, which must compete and play by the same rules.
For instance, Northridge Hospital Medical Center in Los Angeles was caught by the state of California refusing to give a woman in labor an epidural a spinal block used in childbirth because she would not pay cash up front to the anesthesiologist. The surgeon demanded payment from the husband in the delivery room before he would administer the pain killer. The woman was a Medicaid recipient.63 The hospital was not alone. Sally K. Richardson, the Medicaid program's national director, said Medicaid patients report they were asked to pay cash for an epidural at a dozen hospitals in Los Angeles, and Florida officials report similar problems.64 Los Angeles Times reporter Sharon Bernstein also uncovered that the County of Los Angeles, in a cost-cutting tactic, required poor women, even in high-risk cases, to undergo vaginal deliveries, rather than perform the more costly caesarian section. As a result, the County paid $24 million between 1992 and 1997 to settle forty-nine claims of mothers and children who died or were injured due to the policy.65
Public hospitals that have treated the indigent for years are pitted against franchises of the for-profit hospitals which, in the age of managed care, are even looking for Medicaid patients while turning away the indigent who do not qualify for federal assistance.
Abraham Verghese tells how pressures from for-profit satellite hospitals have undermined care for the indigent and community hospitals, such as the one he works at, R.E. Thomason General in El Paso, Texas.
Suddenly, Medicaid patients, who for decades were not so subtly turned away by other providers and sent to Thomason, are now desired by all.The for-profit hospital industry does not dispute that it is closing beds, but says there are simply too many hospital beds.
Of course, this is a self-fulfilling prophecy. When bureaucrats refuse patients who need admittance, hospital beds go unused but this does not mean that patients are not in need of hospitalization, simply that they are not allowed in or to stay over night.
The industry relies on hospital census data to show that there is so-called overbedding and excess capacity. But the "census" data is rigged and does not reflect the real number of patients actually in beds, just those staying past midnight.
Nurses now refer to the "twenty-three hour" hospital day. Census counts used by hospitals are invariably taken at midnight. They reflect patients who have actually been admitted to the hospital for an overnight stay. They do not account for the large numbers of patients who may spend all day in those beds but are not formally admitted as "inpatients."
"Outpatients," who undergo chemotherapy or an angiogram, spend hours in a hospital bed, but are not included in the census, which reflects an empty bed for the day. The California Nurses Association reviewed staffing census charts for an Oakland hospital and compared census counts made during the day shift with the official census count at midnight. Over a nineteen-day period, there was an 11% difference, 378 patients who were in the bed during the day but not included in the official census count. That's an average of twenty patients per day or 7,262 patients for an entire year.67
By artificially lowering the patient census count, hospitals also lower the number of nurses who must be on staff to meet regulated "acuity" standards the number of nurses required for a specific number of patients with an acute condition. Other accounting manipulations in the census include deducting the number of patients in hospital observation units, a "short stay" unit. The patients in their bed at midnight were actually subtracted from the census count.
The industry also has an interest in manipulating census numbers because they artificially demonstrate that hospitals can be closed reducing overhead costs. But that's little comfort to the trauma patient who has to be transported the extra forty miles to the next town because his community hospital closed. While profits to corporations like Columbia for the dismantling of hospital beds are substantial, the cost of rebuilding those hospital beds, when needed by a community, would be astronomical.
During the winter of 1998, for instance, an influenza epidemic exposed the "empty bed" myth. In California, the hospital industry had progressively downsized its hospital beds, boldly claiming an overbedding crisis. Unfortunately, when patients were stricken with a flu outbreak in the fall of 1998, there was suddenly a tremendous shortfall of hospital beds with patients forced to wait in emergency rooms, hallways and parking lots. Prompted by the spectacle, the California Emergency Medical Services Authority issued a report in October 1998 that found there was not enough capacity in the state's emergency rooms and hospitals to deal with catastrophes.
During an earthquake or other natural emergency, hospitals are needed. As the hospital downsizing continues, though, community infrastructure will evaporate just when communities need them. The issue of required capacity is simple: do we close firehouses because there is not a fire every week, or do we keep them open so when fire hits, communities can respond appropriately? In the age of corporate medicine, the same civil values that keep a fire station open do not apply to hospitals.
The Tenet Story
Columbia is not the only corporate culprit in the hospital game. The nation's second largest hospital chain with 123 hospitals now called Tenet has a similarly checkered past. In 1994, Tenet, then called National Medical Enterprises (NME), pleaded guilty to federal conspiracy charges for paying kickbacks to doctors from the late 1980s through 1991. The company paid $375 million in fines and penalties, which is the largest health fraud settlement in U.S. history to date, though it could be surpassed by Columbia's pending fine. Now Tenet is hoping to pick up the turf of its former competitor, Columbia which, in the throes of scandal, is divesting many of its hospitals.68 Ironically, one of the counts against Columbia is the same for which Tenet was busted by the feds having inappropriate financial relationships with physicians. According to whistleblowers, Columbia also paid doctors special bonuses in order to have them refer patients to Columbia facilities so that the company could charge whoever was paying the bill.69 These sorts of abuses are endemic to health chains operating in a for-profit environment (be they not-for-profit or for-profit companies). The tendencies of the for-profit medical corporation to emphasize profit, market standing, and empire building are subjugating ethical patient care and community medical values.
Even after Tenet's embarrassing 1994 scandal, for instance, a 1998 federal investigation was launched alleging, according to the subpoenas, Tenet's "connection with an investigation of Medicaid and/or Medicare fraud" at its Florida hospitals. The federal inquiry, like the one in 1994, centered on financial arrangements between the hospitals and doctors.70 In 1997, the province of Ontario, Canada sued Tenet for allegedly bilking Canadian taxpayers out of at least $25 million for substandard treatment of patients. The government said agents for Tenet brought Ontario residents to its hospitals in the United States, provided improper care and then billed the Canadian province.71
The impact on patients of the hospital chain's profiteering can be seen by a 1997 $100 million settlement Tenet entered into with 700 former patients who claimed the company's physicians illegally imprisoned them in psychiatric hospitals in order to obtain claims payment from their insurance policies. The patients contended that they could not leave the health care chain's institutions until their insurance benefits had been exhausted. Patients said they were prevented from making telephone calls or talking to their family members. Many lodged charges of abuses, such as being placed in restraints for weeks on end or being forced to sit motionless for hours.72
HMO medicine lends itself to the hospital chain muscling out the community hospital and its values. But reckless budget slashing based on the profit motive is not the only issue.
Catholic Health Association, for instance, has 542 hospitals, 319 long-term care facilities and fifty-six health systems. It lays down another demand, according to vice president of the Association Sister Jean deBlois, "We will not partner with a hospital that does abortions."73 A non-profit chain may be less susceptible to engaging in the profiteering of the for-profits, but access under the law is a different story.
Roe vs. Wade firmly established the de jure right to abortion in our civil realm but as Catholic Healthcare West partners with more and more community hospitals, it imposes a de facto ban on reproductive services in its hospitals. The ban covers elective abortions, in vitro fertilization, direct sterilization of women and men, contraception, and ‘morning after' pills. When hospitals that partner with this Catholic chain are the only hospital servicing a community, patients with rights under Roe are placed in a precarious situation that a community hospital would never have put them in.
One woman, a mother of two, who had an abortion at an outpatient surgery center because all the hospitals in her area were Catholic-affiliated, told the Sacramento Bee, "I was fearful that if something went wrong I wouldn't be at a hospital. I was unsure of the kind of care I would receive."74
From 1990 to 1997, there were eighty-four affiliations between Catholic and non-Catholic hospitals.75 What has promoted this trend? Why would a successful community hospital affiliate with the Catholic Health Association? The answer again is managed care.
The larger chains control the contracts that ensure profitability.
"We began this process because we wanted to be in the best possible position to preserve our commitment to the community in this rapidly changing health care environment," said Marvin Reiter, Chairman of the Board of Community Hospital in Riverside, California, a long-time independent hospital that in August 1998 merged with Catholic Healthcare West after a lawsuit-laden fight against the merger. "We felt the only way to achieve that was by affiliating with a larger system."76
Two out of three of the city's hospitals are now Catholic Healthcare West facilities. As part of the merger, the hospital agreed not to provide any reproductive services.
Bruce Satzger, the administrator of Community Hospital, said the board "had to think long and hard about an affiliation process and how to stay and be viable as a hospital in the future." The merger, he believed, allowed the hospital to compete for big HMO contracts while lowering costs.77
In rural areas, the problem is exacerbated. In California's rural Lassen County, for instance, the one hospital is Catholic owned. Women who want tubal ligation, let alone abortions, must travel 100 miles over winding mountain roads to Chico, Redding or Sacramento.78
To fight for survival in the hyper-competitive medical marketplace, hospitals are also becoming their own HMOs. Cedar-Sinai, one of Los Angeles's top hospitals, for instance, applied to become licensed as an HMO.79 One-time healing institutions will thus become organs of money management. Merger and acquisition in the hospital industry increased by 22% in 1997, according to a study by Irving Levin Associates of New Canaan, Connecticut. Since 1994, total transactions have increased by 109%.80
Communities have fought back against takeovers by large hospital chains. Many hospitals, however, have had to transform and pick between the lesser of two evils just to survive.
Should they have to?
That question is not asked today in the halls of government or public forums. Hospital corporations assume they are calling the shots and civil society cannot fight them at any level, particularly not through the dictates of government. Attempts at reform have been stymied by industry lobbyists. Bills to establish safe staffing levels and protect community hospitals in state legislatures have fallen victim to the cash-rich might of the for-profit hospital lobby.
Not-for-profit hospitals sit on assets worth hundreds of billions of dollars, so it's not surprising that big hospital chains have taken aim on these institutions. It is frightening, however, that most regulators have not been able to slow or stop them. Can community self-interest rebound before it is too late?