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Rural Minnesota Hospital Survives a Fight with the Feds

Cheryl Clark, for HealthLeaders Media, January 13, 2010

The five-year False Claims Act litigation against a 15-bed critical access hospital in remote Western Minnesota has ended. Wheaton Community Hospital and Medical Center, which serves a 1,600-population farm community, will not have to close.

No more federal accusations that for six years, Wheaton defrauded the government. No more charges from the Office of Inspector General that the municipal facility unnecessarily admitted patients, some as old as 85, 91, and 96, or kept them hospitalized for "social" reasons or to raise "enough money to pay for the hospital addition."

No more allegations from a physician whistleblower that the hospital's main admitting physician and co-defendant in the case generated $4 million a year in billings, 13 times what the hospital's other physicians billed, in part by allegedly needlessly delaying patient discharges.

Last week, Wheaton Community settled the case and agreed to pay Uncle Sam $846,000 (plus another $187,000 in attorney's fees) so that the draining saga would no longer monopolize the city's resources. The co-defendant, osteopath Stanley C. Gallagher, who admitted most of the hospital's patients, paid an additional $283,000, according to the settlement.

What lessons did they learn, if any? Unfortunately, they aren't saying, in part because they are prohibited by a federal agreement from discussing the case in detail.

That's too bad because there are several lessons to be learned here. Maybe the hospital should have focused more on finding other less expensive and more appropriate facilities for its frail seniors who didn't need acute care. And maybe officials were a bit too blatant about the need to bring in lots more money to build an addition at the government's expense.

"We want to move on," says Jesse Tischer, who took over as administrator/CEO one year after the period in contention. "Our census is five (patients) or less every day, and we don't have a lot of resources to be dedicating a lot of time on this," he says. "Sometimes it's just not worth it to fight."

A corporate integrity agreement in which the hospital will be under tight federal scrutiny will keep officials busy, accounting for every patient's diagnosis, every test, every prescribed drug, and virtually anything else the hospital does or tries to do for the next five years.

Tischer and Gallagher don't think they had a choice, and gave me the impression they think federal officials were just picking on the little guy and that the feds didn't understand the peculiar issues in rural communities like Wheaton, where low-income elderly people who feel sick have no where else to go except an acute care setting.

"We had no nursing home, no assisted living, no home health available on weekends," says Gallagher, who admitted most of the patients. "Some of these people had to be admitted to the hospital. There was no other choice of what to do. Their kids had grown up and moved, so they had no family to take care of them at home. These patients presented by ambulance."

Tischer also says he's not sure there was an alternative. "I don't know there's a lot we could have done," the 32-year-old CEO says. "But I can tell you this, if I believed that any of these accusations were truthful, I wouldn't be here."

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