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TABLE OF CONTENTS

TABLE OF CONTENTS____________________________________________1
1 The Columbia Story and an Overview______________________________2
1.1 In September 1993 .................................................................2
1.2 In February 1994 ....................................................................2
1.3 In April 1995 .........................................................................2
1.4 In March 1996 .......................................................................2
1.5 In August 1996 ......................................................................2
1.6 In October 1996 .....................................................................3
1.7 In November 1996 ..................................................................3
1.8 By December 1996 .................................................................3
1.9 In February 1997 ....................................................................3
1.10 In March 1997 ......................................................................3
1.11 In July 1997 ........................................................................4
2 Corporate Philosophy__________________________________________5
3 Allegations of Unsavory Behavior At The Time Of The FBI Raids__________6
3.1 PACMAN activity ....................................................................6
3.2 Shortchanging the community and patients....................................6
3.3 Relationships with doctors.........................................................6
3.4 Misusing integrated systems.......................................................7
3.5 Market control.......................................................................7
3.6 Marketing ............................................................................8
3.7 Billing practices.....................................................................8
4 Fraud Investigation____________________________________________9
4.1 The July 1997 FBI raids.............................................................9
4.2 A new chairman and a new approach............................................9
4.3 HCA's Track Record..................................................................9
4.4 Using this information to press issues in Australia............................10
4.5 Vindicated again...................................................................10
4.6 One Whistle Blowers Battle......................................................10
4.7 Court actions.......................................................................10
4.8 The Unfolding Investigations.....................................................11
4.9 Breaking up the company........................................................11
5 The Nature of Fraud Allegations and Practices______________________12
5.1 Billing Fraud .......................................................................12
5.2 Patient care.........................................................................13
5.3 Employees..........................................................................14
5.4 Relationships With Doctors.......................................................14
5.5 Accreditation processes...........................................................15
5.6 Marketing...........................................................................15
5.7 PACMAN activities..................................................................15
1 The Columbia Story and an Overview

Columbia Healthcare was formed in July 1988 by Richard Scott, a lawyer and Richard
Rainwater, a financier. It was formed in partnership with 120 physicians. It bought two
hospitals in El Paso, Texas. In May 1990 it bought a laboratory company and listed on the
stock exchange.

1.1 In September 1993

Columbia merged with Galen Health Care which had earlier been spun off from Humana.
It now owned 99 hospitals in the USA and internationally. It expanded its policy of
selling ownership stakes to physicians in order to bind them to the corporations profit
mission

1.2 In February 1994

Columbia merged with Hospital Corporation of America (HCA) to form Columbia/HCA,


now a US $10 billion company. Scott becomes president and CEO. HCA's chairman and
CEO Thomas Frist MD Jnr became vice chairman. Columbia/HCA now enjoyed the
political support of the two Frist family US senators.A year later Scott moved the
headquarters from Louisville to Nashville.

1.3 In April 1995

Columbia/HCA acquired Healthtrust for US $ 5.6 billion. McWhorter, Heathtrust's CEO


became chairman but was later replaced by Scott.

In a contentious purchase which divided the church Columbia/HCA acquired half of a


Roman Catholic group in Cleveland in May 1995. During 1995 Columbia/HCA
purchased or formed joint ventures with 33 not for profit hospitals.

1.4 In March 1996

Columbia moved to purchase the not for profit HMO's Blue Cross and Blue Shield. This
was met with a public outcry. Columbia/HCA persisted in its efforts but when the FBI
raided its hospitals in March 1997 it was forced to abandon the deal.

1.5 In August 1996

The New England Journal of Medicine published two articles by Robert Kuttner
attacking Columbia/HCA's business practices and its corporate philosophy.

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1.6 In October 1996

the 60 Minutes national TV program screened a hard hitting exposure of


Columbia/HCA's practices.

1.7 In November 1996

Columbia/HCA's PACMAN activity in purchasing not for profit community facilities


received another setback when the California's attorney general blocked its $202 million
bid for the assets of San Diego-based Sharp Healthcare. He claimed that Columbia/HCA
undervalued the system.

1.8 By December 1996

Attorney generals across the country had stepped in to scrutinise and check
Columbia/HCA's purchase of not for profit hospitals. It had acquired only 17 during
1996.

Frustrated in its profitable PACMAN activities Columbia turned its eyes elsewhere. It
made a bid to acquire Value Health, a benefits management company. It also looked to
expand its international operations. It bought a managed care group in the United
Kingdom.

Representative Pete Stark, who years before piloted the Stark anti-kickback legislation
into law was particularly critical of corporate for profit medicine and of Columbia/HCA.
He said "the for-profit chains have the minds of piranha fish and the hearts of Doberman
pinschers." He indicated that Columbia/HCA was "the PACMAN of the industry." On
another occasion referring to Columbia/HCA executives he stated "Hopefully they will
all be in jail soon for the crimes they have committed across the country."

1.9 In February 1997

Scott claimed that 1996 was the company's best year ever. Its net income was US $1.5
billion on US $19.9 billion revenues. Its stock reached US $43.88, an all time high. It
owned over 350 hospitals. It announced its plans to spend US $1 billion to enter and
rejuvenate the Australian health care marketplace. It bid to buy the French company
Generale de Sante Internationale (GSI), the largest in Europe.

1.10 In March 1997

Federal agents raided Columbia/HCA's El Paso operations, the facilities where Columbia
first began its controversial policy of encouraging doctors to buy stakes in its hospitals.
This circumvented the intention of the Stark anti-kickback laws.

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There was widespread adverse publicity about the company's billing practices and its
relationship with doctors. The New York Times published the results of its analysis of the
company's disturbing billing practices.

Columbia/HCA abandoned its attempt to enter Australia and its bid for GSI was rejected.
Australia, France and medical associations in Europe were all well informed of the
concerns about the company and in possession of documents.

Scott arrogantly declined to talk publicly about Columbia/HCA's fraud problems and it
was left to Thomas Frist to placate critics.

1.11 In July 1997

Federal agents executed search warrants across the USA seizing documents relating to
laboratory and home care services. Scott resigned and was followed soon after by David
Vandewater, president and COO. Thomas Frist became chairman. Columbia approached
Tenet/NME with the view to am merger. This would have enabled it to capitalise on
Tenet/NME's experience in a similar situation. The merger fell through.

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2 Corporate Philosophy

The company saw itself as providing "fast-medicine". It modeled itself on Macdonald's


and Walmart. In promoting the Macmedicine model of care Scott followed NME's John
Bedrosian in arguing that "free market, competitive forces should be the driver". He was
scathing about not for profit health care and did not think that they should be in business.
His attitude to the community's health, to preventive medicine and to the care of the poor
is reflected in his rebuttal of the concerns of others . He stated "We are not in the health
care business. We are in the sick care business."

Columbia/HCA adopted a very aggressive commercial approach. It paid little service to


the ethics of the professions and employed teams of lawyers to stretch the law as far as it
could. Profit and growth were the measures of success and dominated all decision
making.

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3 Allegations of Unsavory Behavior At The Time Of The
FBI Raids
3.1 PACMAN activity

Columbia/HCA's lawyers allegedly moved in and opened secret negotiations to buy or


merge with not for profit community hospital directors. The public and doctors were not
told until the sale was completed. Often the sale price was not made public.

Regulations required for profit chains to continue preexisting services after buying not for
profits. To circumvent this non paying community services run by not for profits were
quietly terminated prior to the sale. Community assets were bought at prices well below
their market value. Board members and executives selling not for profits benefited
financially. There were concerns that they were offered inducements which may have
violated laws against bribes. There were claims that money intended for community
projects was subverted.

3.2 Shortchanging the community and patients

Columbia was accused of anticompetitive behaviour and of giving financial


considerations priority over community needs. Decisions were made centrally and not at
the community level. There was a lack of commitment to any particular community.

Columbia/HCA was alleged to have closed needed local community hospitals once it had
secured market position with control of all hospital facilities in the region.

It was claimed that when compared with not for profit services it did not invest in costly
services as readily and the amount of charitable and indigent care provided was much
lower. Charges were consistently higher and any cost savings were due to one factor only,
staff reductions. This was not as claimed due to purchasing power. They were accused of
cherry picking profitable admissions, cream skimming and patient dumping

Larger profits were made by Columbia/HCA through charges which were substantially
higher, by not providing expensive and less profitable services, and by reducing staff
levels. These profits were passed to shareholders and did not benefit the community.

3.3 Relationships with doctors

As with Tenet/NME control of the profession by a variety of financial strategies was


critical to Columbia/HCA's success. The business community saw nothing wrong with
such unethical and often illegal practices. The Wall street journal reported that
Columbia/HCA received plaudits from Wall Street for its ability to form beneficial
alliances with local doctors.

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The company allegedly offered doctors incentives to secure their compliance, ensure their
loyalty and their patients. Doctors were offered investments in the hospital in such a way
that the profits made would be linked to their increased utilisation.

There are allegations that doctors were offered fishing and hunting trips in Texas,
Mexico, the Caribbean and Alaska as inducements. They were paid illegal kickbacks
including vacations, free offices, rent and opportunities to invest. These were exactly the
sort of allegations made about Tenet/NME 6 years earlier. Columbia/HCA allegedly used
its power over physicians to secure profitable patients for their hospitals by "cream
skimming".

Columbia/HCA's business strategies in dealing with doctors were particularly unpleasant.


It is claimed to have used confidential information obtained during failed merger
negotiations to improperly recruit physicians. It assured doctors joining its clinics that the
company would use all their resources to ensure that any competing medical services
failed. They were alleged to have used uncompetitive strategies to destroy competition
from rival clinics.

3.4 Misusing integrated systems

While Columbia/HCA strongly promoted its integrated system this served the company's
shareholders and not the community. Instead of integrating with other services it was
claimed that its "sole goal was to divide and conquer and protect their company profits."

Its behaviour was anticompetitive. Robert Kuttner analysing its conduct indicated that
"Columbia's strategy works not just to produce cost economies but also to prevent
shopping around and to allow Columbia/HCA to impose conditions that doctors and
patients might otherwise resist."

It used its own integrated system to maximise services and profits. It had a higher number
of payments for costly outpatient services like home care. It charged more for these
services and used the services more. This was facilitated by agreements with doctors
which circumvented the anti-kickback laws by giving them a financial interest in local
integrated systems. One competing home care service went to court alleging unfair
practices in an attempt to exclude them from the market in Texas and nationwide. They
accused Columbia/HCA of offering hospital staff incentives to refer patients to home care
facilities affiliated with Columbia/HCA

3.5 Market control

Kuttner stated that "Columbia/HCA insists that medicine is a business, and increasingly
imposes its rules on the competition game." It attempted to become a managed care
company while remaining a provider. Carl Ginsburg writing in The Nation said "Add
Columbia's growing interest in owning managed care systems, which control health care
access, and every piece of the patient for profit puzzle is in place."

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3.6 Marketing

Like Tenet/NME the company considered marketing as a most important activity and
central to success. Its marketing budget sometimes exceeded US $100 million a year. It
was particularly aggressive in attacking its competitors in its advertising. Its public
relations campaigns portrayed not for profits as social parasites.

In prosecuting its PACMAN activities the issues were often obscured by crafted press
releases and public relations campaigns which misrepresented the nature of the "joint
ventures".

There were concerns about the way in which hospitals obtain their accreditation and the
way they advertised some of this. They allegedly falsely advertised suggesting that they
had won the Baldridge accreditation award.

3.7 Billing practices

The New York Times analysis identified "upcoding" occurring in Columbia/HCA


hospitals. About 100 illnesses such as pneumonia could be coded as simple pneumonia
($3150) or as complex pneumonia ($6800). Columbia gave employees doing the billing
"focus codes" on which to concentrate. Columbia/HCA hospitals had a very much higher
proportion of complex pneumonia codings. This practice of inflating the seriousness of
the illnesses was very profitable because of the large numbers of codes allowed

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4 Fraud Investigation

4.1 The July 1997 FBI raids

Following the FBI raids on Columbia/HCA across the USA in July 1997 Richard Scott
arrogantly rejected the allegations of misconduct and refused to speak publicly. He
insisted they had done nothing wrong. He obviously believed this. Thomas Frist was
forced to do the public speaking. Soon after the board forced Scott and his henchman
VanderWater to resign. Scott received a $12.4 million severance package and the
company later bought him a mansion to live in. He eventually walked away with more
than US $17 million. Over the succeeding months there was a purge of a number of
senior staff and some lawyers.

4.2 A new chairman and a new approach

Thomas Frist, the past chairman of HCA became the new chairman of Columbia/HCA.
He stopped denying the allegations. Instead he claimed that he was radically restructuring
the company and making major changes in policy and philosophy. In doing so he
implicitly admitted to many of the complaints made about the company.

Frist claimed that he was going to make the company more like the HCA which he had
run, implying that HCA was some sort of a role model. It would be less aggressive and
more patient centred. I was very critical of Frist and pointed out that his statements were
no more than a public relations exercise - a facade. If Columbia/HCA actually abandoned
its practices its profits would fall and it would lose the support of the market.

Unlike Tenet/NME Columbia/HCA under Frist has not tried to reject or deny the
allegations. Instead it has made conciliatory noises and sought to reach some sort of early
settlement with government. Frist claims that he had been unhappy with Scott's style.
Frist publicly set aside US $1 billion to settle with the government and promised
shareholders that it would be settled by March 2000. By April 2000 the government had
not yet taken the bait.

On 25 October 1997 The Dallas Morning News reported "We have zero tolerance for
anything wrong," Dr. Frist said, pounding his fists on the lectern. "We have got to have
the public trust." Frist had been chairman of HCA and vice chairman of Columbia/HCA.

4.3 HCA's Track Record

In my submissions I pointed out that HCA under Frist had an appalling track record. It
was a disturbing role model. The 1993 DAY ONE television program had exposed
misleading advertising, fraudulent admission of patients who did not need admission and
the misuse of teenagers for profit. HCA had paid a large settlement for similar practices
in Texas.

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4.4 Using this information to press issues in Australia

In August 1997 Queensland was revising its state hospital licensing regulations. I used
Frist's admissions and planned changes to press Queensland and other states to set in
place regulations which would give probity regulations teeth and control corporate
behavior by forbidding similar business practices (e.g. incentives). The letter gives more
information about Columbia/HCA's statements at this time and quotes from articles.

4.5 Vindicated again

Within the next 12-18 months my assertions about HCA were more than confirmed.
Billing irregularities are the easiest of the major fraudulent practices to identify and
prove. The fraudulent practices used by Columbia/HCA had been introduced into HCA
and into Quorum and Healthtrust while the latter were owned by HCA. The allegations
went back to 1984. Frist was chairman of HCA during this period. The investigation into
these practices had started as early as 1993. The Qui Tam whistle blower lawsuits which
the government joined had been lodged by James Alderson in 1993 before Columbia
merged with HCA in 1994. Clearly many of the criminal practices had come to Columbia
from HCA with Frist. More than 200 hospitals from the HCA stable in at least 37 states
were named as defendants in the lawsuit against Columbia/HCA.

4.6 One Whistle Blowers Battle

The NY Times 18/10/98 told the fascinating story of James Alderson against "the huge
Hospital Corp. of America and three of its corporate spinoffs" who "had cheated the
government with bogus expense claims." The paper described it as "a battle so far fetched
-- one man versus four huge corporations". The discovery "made by one man at a small
rural hospital ultimately unraveled a nationwide, systemwide scheme". The story of
health care fraud is the story of regulatory failure. It is the story of citizens who have had
the courage to act against the powerful, and their persistence in the face of overwhelming
odds.

While the press reported this news prominently it was extremely kind to Frist. No one has
confronted him with his claims about a benign and patient centred HCA under his
stewardship or with his personal involvement in all this. His father and his brother were
respected and admired US senators. The Frist family has enormous political power.

4.7 Court actions

Much of the initial evidence used in court came from staff in the company. Some had
cooperated with police, wearing hidden recording devices while speaking to company
executives The first court action was taken against four executives in Florida. A fifth was
given indemnity in return for evidence. The case came to court in July 1999. Some
executives were jailed in December. The justice department commenced civil and
criminal proceedings against Quorum and Columbia/HCA in October 1998. It joined a

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whistle blowers Qui Tam suit. Healthtrust and HCA were now part of Columbia/HCA.
Over 12 separate Qui Tam actions had been taken by whistle blowers.

4.8 The Unfolding Investigations

There were further FBI raids in El Paso Texas in February 1998, and in Las Vegas in May
1998. The tax office was involved and demanded a multimillion payment. The US
Securities and Exchange Commission (SEC) started investigating in 1998 to determine
whether the executives gave investors accurate figures. A number of shareholder suits
were also commenced and insurers later advised that they too suspected that they had
been overcharged. More whistle blower suits were unveiled and by 1999 11 states had
joined in the investigations. The St. Petersberg Times (25/2/99) reported that the justice
department had asked for another US $5 million to fund its investigation of
Columbia/HCA "where fraud has been alleged in virtually every aspect of the largest
health care conglomerate in the U.S."

4.9 Breaking up the company

Faced with a massive fraud settlement Frist started to break up the company and make it
much smaller. Plans to buy Blue Cross and other groups were abandoned. Large number
of hospitals and subsidiaries were sold. The PACMAN activity was reversed. Many
hospitals were sold back to not for profit groups. Not for profit groups had banded
together and successfully discredited Columbia/HCA. Its interest in the catholic hospitals,
which had had caused so much angst, were sold. It reversed its integrated health care
policy and sold off its Home Healthcare subsidiary. In addition it spun off 64 hospitals as
two separate not for profit companies - Triad (42 hospitals) and LifePoint.

This gave it a war chest for its legal battles and fines. It bought back US $1 billion in
shares. It is difficult to know if it has been fulfilling conditions required by government
prior to reaching a settlement which would allow it to continue receiving Medicare
funding. In the same situation Tenet/NME sold all its rehabilitation hospitals and
subsumed its other specialty hospitals into its psychiatric division most of which was then
sold as a condition of the settlement. This allowed it to plead guilty in the name of a
single subsidiary, retain Medicare funding and claim that this one division was an
infected appendage which had been amputated.

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5 The Nature of Fraud Allegations and Practices

On 11 May 1997 before the second FBI raids the New York Times echoed my assessment
of the impact of market principles on health care. It summarized Columbia/HCA's
enormous financial success by saying "At the heart of that achievement is an aggressively
competitive vision of medical care, one that applies the practices of corporate America to
an industry still dominated by not-for-profit institutions."

Also "These practices include not only in-your-face marketing, but hospital takeovers,
cost-cutting and layoffs, volume purchasing, complex pricing strategies and large
monetary incentives for managers who meet financial targets."

and "In 1995, 25 percent of Columbia's administrators won bonuses of at least 80 percent
of their salaries, according to the Advisory Board, a consulting company. Thirty percent
received none."

Staffs were sent score cards setting out their monthly targets. Administrators who failed
to attain their monthly budgets had to write extensive reports explaining what happened
and how they planned to boost profits. The 10 lowest performers had to meet with Scott
and senior managers

Similar incentives were at the heart of the problems in Tenet/NME's empire. They called
it "plan". Bonuses and job prospects were based on "meeting or exceeding plan". This
severely dysfunctional practice is central to microeconomic reform. Incentives linked to
financial performance are universally adopted even in Australian health care
corporations.

5.1 Billing Fraud

Some expenses incurred by companies in running hospitals are claimable against


Medicare. Columbia/HCA claimed reimbursement for advertising and marketing, for
expenses incurred in recruiting doctors from competitors, and for running hospital gift
shops and cafeterias. None of this was legal. It also illegally shifted its hospital overhead
expenses to its home health care operations then claimed them. It used its integrated
system of acquired corporate subsidiaries to fraudulently obtain federal reimbursement.
There were allegations that staff were told to hide documents from Medicare

An affidavit claimed that Columbia/HCA acquired a group of Olsten home care agencies
for a price far lower than comparable deals, but then entered into management
agreements with the seller. These allowed Columbia to shift acquisition costs that are not
reimbursable by the government into administrative costs that are. In April 1999 Olsten
paid US 61 million to settle a fraud action related to one of the rackets involving
Columbia/HCA.

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The Internal Revenue Service's demanded $267 million in taxes for 1993 and 1994 to pay
among other things back taxes on a reserve fund kept in case Medicare challenged
Columbia/HCA's bills. Columbia/HCA hospitals had prepared two costing documents -
one actual costing to fall back on and another allegedly fraudulent set to try out and see if
Medicare would accept it. If Medicare had objected they would have offered the other.

A 1997 affidavit alleges the Texas division of Columbia/HCA made false billings for
hospital supplies and set up a shell medical laboratory to funnel kickbacks to doctors.
Senior staff it appears knew of the practices.

In December 1998 a second whistle blower suit was unveiled. After lodging his suit in
1995 this whistle blower returned to his job gathering information for the government.
The suit alleged that Columbia/HCA routinely submitted false documentation to
Medicare, Medicaid and CHAMPUS, a civilian health-insurance program for the
military. Interestingly the allegations in this suit were limited to about 100 hospitals
owned by Columbia prior to its merger with HCA in 1994.

The NY Times (31/12/98) reported that "the latest suit also for the first time brings claims
that Columbia hospitals manipulated expenses to increase reimbursement for outpatient
services like home care, sometimes by misreporting expenses associated with the
acquisition of companies involved in those businesses".

In February 1999 the government filed an amended claim accusing “- - - the hospital
group of falsifying claims in every report submitted since 1985."

The NY Times (9/4/99) reported that the Justice Department had joined a third Qui Tam
lawsuit alleging that Columbia/HCA Healthcare Corp. and Curative Health Services Inc.
defrauded Medicare. Curative managed wound care centers at 42 Columbia/HCA
hospitals. They allegedly charged Medicare for costs to which they were not entitled,
including excessive over-inflated management fees, advertising and even for US $400
kickbacks which Columbia/HCA was paying Curative Health for referrals.

Columbia/HCA was accused of ordering unneeded lab tests, giving illegal inducements to
Texas doctors and inflating costs elsewhere. Columbia hospitals operating throughout the
United States were claimed to be involved in fraudulent bills for laboratory tests.

5.2 Patient care

A study in 1996 compares Columbia/HCA hospitals with not for profit hospitals had
shown deficiencies in the range of care, staffing, and service to the community. After the
FBI raids current and former hospital employees claimed that Columbia's aggressive
profit first practices began "affecting patient care immediately after Columbia's 1994
takeover of Hospital Corp. of America".

Modern Healthcare (15 Sept 97) reported that "Consumer groups, nurses and labor
advocates have contended for some time that Columbia reduces staffing to unsafe levels

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at its hospitals in an effort to control costs." Investigations in Kentucky and in California
revealed staffing deficiencies resulting in problems in care. Regulations had been
breached and one patient had died.

The Denver Post 4/3/99 reported that part of HealthONE for-profit system, which is co-
owned by Columbia/HCA Healthcare was nearly closed in 1995 and was being reviewed
again. As in the aged care industry, the allegations being made could reflect a problem
with staffing levels.

A CEO of one hospital claimed that she was fired for refusing to lay off staff or to force
physicians to discharge small babies prematurely. Both would have compromised care

5.3 Employees

More than 2000 HealthTrust employees claim that the company improperly cut them out
of a stock option program when they resigned. They are making a large claim.

The nursing unions have been in a protracted battle with Columbia/HCA.

5.4 Relationships With Doctors

Modern Healthcare (10/11/97) reported that a CEO at one of Columbia/HCA's hospitals


was dismissed for refusing to indulge in illegal conduct which was likely to jeopardize
patient care. The allegations include

 Being pressured to hire an underling whose job would be to increase referrals to


Columbia's home-care services regardless of medical necessity or the legality of
the referrals.
 Being instructed to cut 150 staff positions at the hospital despite her objections
that the layoffs would jeopardize patient care.
 Being pressured to threaten physicians with canceling contracts for services if
they didn't shorten the costly lengths of stay of neonatal patients.

In 1992 a CEO at a Tenet/NME Hospital lodged a similar action which was very rapidly
settled with a muzzling agreement. There was a single press report. The Columbia/HCA
action too has received no further publicity.

An affidavit claimed that compensation was paid to doctors "as specific inducements for
patient referrals to Columbia facilities". Another affidavit claims that the company set up
a shell medical laboratory to funnel kickbacks to doctors in Texas.

Reports in the NY Times and Modern Healthcare indicated that "Columbia/HCA


Healthcare Corp. has ordered its hospital executives to collect back rent and other money
owed by doctors, as part of its reorganization and efforts to deal with a federal
investigation." It also indicated that "federal prosecutors are looking into a variety of
arrangements Columbia made with doctors". The extent of the practices is clear from the

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structure set up to collect the money. The Times says "President Jack Bovender
demanded collection of overdue money and set up a five-person team to oversee the
process".

The March 9 edition of Medicare Compliance Alert, a newsletter published by Rockville,


Md.-based United Communications Group, reported that some Columbia hospitals
neglected to bill physicians for rented space for up to two years. Amounts of overdue rent
ranged from US $70,000 and $400,000. This must have been a very strong inducement
for the doctors to keep Columbia/HCA on side by bringing in patients and then
manipulating them through the integrated system to maximise profits.

Tenet NME also loaned doctors large sums on very lenient terms. Team players were
sometimes not expected to repay them.

Columbia/HCA owned large numbers of physicians practices. They had contracts with
the physicians and were in a strong position to exert influence. According to the NY
Times 27/8/98 it was removing 900 doctors from its payroll.

5.5 Accreditation processes

According to the NY Times (11/2/98) "Sweeping federal investigations of


Columbia/HCA Healthcare Corp. are focusing on whether the company cheated federal
health programs and lied to a hospital accreditation commission"

El Paso investigators were examining whether the company submitted false records to the
Joint Commission on Accreditation of Health Care Organizations, the main hospital
accreditation group. (NY Times 11/2/98)

5.6 Marketing

An affidavit claimed that officials purportedly working in public education were in fact
engaged in marketing and sales. Rather than providing health education to the community
executives charged with that responsibility spent most of their time making sales calls to
doctors and "hunting" for patients. A document from the home care division stated that
"the primary marketing resources at the disposal of any of the Columbia home care
agencies are the community education coordinator and home care coordinator."

5.7 PACMAN activities

Health Line (5/3/99) reported that the Internal Revenue Service was cracking down on
some of the jointly owned not for profit hospitals as they do not comply with not for
profit status and so are not exempt from tax.

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