Tenet Files Suit Accusing Community Health Of Inflating Hospital Admissions
Posted Apr 11 2011 10:55am
Community Health has been working at a hostile takeover of Tenet which started back in January, or least that’s when it started receiving coverage in the news. Community even went so far as to recommend replacing their board of directors with their suggestions.
After refusing the bid for purchase is when things somewhat went in to action. Both are publicly owned companies. Tenet states their due diligence investigations revealed that that Community has been billing Medicare at inflated rates and has a practice of admitting patients when they should be cared for as outpatients. Of course this all comes down to bottom lines and profits. This will be interesting to see how this plays out and if in fact this is occurring. I wonder also if it proves to be true when investigations are done, would Tenet be considered a whistle blower in place for any rewards? That was just something that went through my head.
It’s a battle of big corporate hospitals here for profit and this is not unusual with questioning admitting procedures at all. I have had doctors tell me that they have been in executive meetings where they are on staff at hospitals and have heard the words “we are not meeting our admission quotas”, and of course most MDs when they hear that as well as you or I scratch our heads and wonder, are there quotas? In someone’s mind but in essence with business intelligence they are figuring out about how many admissions they need to cover basic operating costs. Hospital systems all over the US are being marketed and sold this type of software so they can adjust and meet goals and it’s not cheap. Some of the vendors who sell this type of product are owned by insurance companies too, interesting concept right, and Tenet has their interest in this area too with software as everyone is a software house today to even include the AMA as when you visit so many of these physician support sites, they all have software sales right in your face as the first area of focus and then if you need other support in healthcare, you can dig around and usually find some additional information, but first off, “notice our software”. <grin>. Several times last year Tenet themselves had been in the news stating their admissions had been down.
This has been a sore spot for a few years. Actually a while back the TMA did a video about a group of doctors that were fired as they refused to work the system and admit more patients as an example Here’s the video just as information and it is from the archives and does not relate to this legal suit. The video was done back in 2009 and the hospital fired the physician’s group for not meeting the admission quotas as they wouldn’t increase and admit more patients just for the sake of doing so to raise money. BD
Tenet Healthcare Corp. (THC) filed a lawsuit against Community Health Systems Inc. (CYH), questioning its admission practices, which Tenet alleged overstate the hospital operator's growth statistics.
The company also accused Community, which went public in December with its $3.3 billion hostile offer for Tenet, of misrepresenting expected "synergy potential" of a deal between the companies. Tenet claims Community Health's stock price has for many years been artificially inflated as a result of the alleged improper admissions.
Shares of Tenet were down 6.4% at $7.07 in early trading. Community Health was off 8.7% at $36.78.
According to Tenet's filing with the U.S. Securities and Exchange Commission, Community Health allegedly failed to disclose its practice of systematically admitting, rather than observing, patients into its hospitals for financial, rather than clinical, purposes.