Federal inspectors identified $167,064 in "unallowable and unsupported costs" at the California Transplant Donor Network, including nearly $100,000 that was not adequate documented, and $19,000 that was spent on a CEO's retirement party.
The audit of 2007, released this month by the Department of Health & Human Services' Office of Inspector General, determined that at the June 2007 retirement party for long-serving CEO Phyllis Weber "CTDN catered for 300 guests, including CTDN’s employees and their spouses, the board of directors, the audit and finance committee, and transplant center officials. The estimated Medicare share of the unallowable costs related to kidney procurement was $9,620."
In addition, "CTDN reported $6,019 of overhead costs and administrative and general costs related to entertainment and alcohol, including $2,619 for transportation and lodging for dancers for a donor family gathering; $2,337 for alcoholic beverages purchased by CTDN personnel; $577 for a party held for individuals who were not CTDN employees; and $486 for ushers’ services at the donor family gathering. The estimated Medicare share of the unallowable costs related to kidney procurement was $3,053," OIG reported.
In a three-page response to OIG's audit, CTDN CEO Cindy Siljeslrom defended the $18,967 spent on the retirement party for Weber. "Based on the length of service and the role this executive played in founding this organization, CTDN believes the costs to be reasonable," Siljeslrom wrote. "However, given the unusual circumstances around the event, CTDN does not plan to sponsor such an event in the future."
OIG sorted the total $167,064 in misspent funds in 2007 into $65,912 of unallowable costs, and $101,152 unallowable costs.
CTDN was unable to provide adequate documentation for $99,168 of the reported $101,152 in unsupported costs, and OIS determined that no documentation existed to account for $1,984 of costs. OIG estimated that Medicare's share of the unsupported costs related to kidney procurement was $51,304.
The $65,912 of unallowable costs tallied by OIG included costs incurred for donations and gifts, the retirement party, entertainment, lobbying, and meals. Federal inspectors estimated that Medicare’s share of the unallowable costs related to kidney procurement was $33,431.
CTDN agreed with many of the OIG findings, but also defended some of the expenses as reasonably associated with fundraising, publicity, and raising public awareness, including events such as the Donor Family Gathering, which allows transplant recipients and their families to thank and share their stories with organ donors and their families.
"In order to participate in community events that provide a forum for community outreach and education CTDN is often asked to contribute to the cost of the event as funding for these types of activities is extremely limited," Siljeslrom wrote. "Volunteers are recruited as additional resources for the events. CTDN occasionally identifies a small way to thank those who volunteer to support this part of our mission. Hence the gifts to non employees."
CTND said it had documented the $99,188 identified by OIG as unsupported "and believes that all the costs are legitimate." However, CTND concurred that the documentation was inadequate.
Consolidations involving for-profit hospital companies acquiring struggling not-for-profit hospitals are a growing and "favorable" trend that will increase competition in local markets, increase efficiencies, and improve leverage with payers, Moody's Investors Services says.
"More consolidation is coming as weaker not-for-profit hospitals seek capital partners in larger for-profit or not-for-profit hospital systems," Moody's said. "Larger systems with greater economies of scale will benefit from healthcare reform because Medicare payments will favor more efficient, lower average cost health providers."
Moody's pointed to the recently completed $120 million acquisition by Tennessee-based for-profit Community Health Systems of the bankrupt not-for-profit Forum Health, a small hospital system in Youngstown, OH.
"Although small, this consolidation indicates that for-profits believe even bankrupt hospitals offer opportunities for future growth, a favorable development for holders of low-rated not-for-profit hospital bonds," Moody's said. "Proceeds from the purchase will (void) outstanding tax-exempt bonds creating an immediate exit strategy for bondholders."
Moody's said the expected sale of Boston-based non-for-profit Caritas Christi Healthcare System to New York-based private-equity firm Cerberus Capital Management—which last week won the approval of the Massachusetts Attorney General—will be closely watched by the for-profit hospital industry.
"The approval is significant: If Cerberus completes the purchase and does well with this investment, it will likely encourage other private equity firms to find hospital acquisition targets," Moody's said.
"In the short term, a merger or acquisition strategy may fund a weak, low-rated, not-for-profit hospital's immediate capital needs and address growing pension liabilities. Consolidations can also help bondholders increase the value of their holdings if it results in higher credit quality when the debt is assumed by a stronger system, or even get 100% immediate recovery in a distressed situation if debt is paid off at the merger."
The transition to for-profit status, however, will bring a loss of transparency.
"As for-profits make inroads into not-for-profit strongholds like Boston and Youngstown, the remaining not-for-profit hospitals will have a tougher time peering inside the walls of their former brethren as the new for-profit owners build a disclosure fortress around their latest acquisitions, upping the competitive climate," Moody's said.
We're three quarters through calendar 2010, so it's a good time to examine where we stand on job growth.
Federal data show that the overall healthcare sector remains one of the few bright spots for job growth in a weak economy. However, we're getting mixed news about job growth at hospitals.
Bureau of Labor Statistics data for September show that hospitals have added 28,200 jobs in the first nine months of 2010—a rate of job growth that is more than double that of 2009, although dwarfed by the 86,200 hospital jobs created in the first nine months of 2008.
BLS data also suggest that hospital mass layoffs affecting 50 or more employees could hit a new record for the year. There have been 102 mass layoffs resulting in 8,233 initial unemployment claims—government-speak for lost jobs—in the first eight months of 2010, a pace that would slightly surpass the record set in 2009, when hospitals reported 152 mass layoffs resulting in 11,787 lost jobs.
So, we've got overall hospital job growth that is:
Healthy when compared to the rest of the economy;
Improving when compared with last year, although slower than it has been for the better part of the last decade; and
Subject to frequent mass layoffs.
A little perspective is needed. BLS tells us that the nation's hospitals directly employ more than 4.7 million people. With all respect to the 8,233 hospital employees who've lost their jobs through no fault of their own—from a macro-economic perspective the layoffs are not a big number. That is especially true when we note that hospitals have created more than three jobs for every job eliminated so far this year.
Major negatives hospitals face include the usual suspects: lower government reimbursements, declining admissions, declining philanthropy for nonprofits, and more charity care owing to job losses in the larger economy. It is not surprising that individual hospitals are imposing short-term layoffs as they reallocate money for other budget concerns, and reprioritize services.
On the other hand, with respect to long-term demand, hospitals may also be primed for a major job growth spurt in the coming years. The federal government's healthcare reforms will expand health insurance coverage for another 30 million or more Americans. More importantly, however, is the impact of demographics. We are aging, and getting fatter and sicker by the year. Americans will require more healthcare well into the middle of the century.
For the overall healthcare sector, job growth is healthy thanks largely to ambulatory services, which accounted for 17,200 payroll additions in September, and 117,200 payroll additions in the first nine months of 2010.
The healthcare sector—everything from hospitals, to chiropractors' offices, blood and organ donor banks, to walk-in clinics—employed 13.8 million people in September, and has been one of the few areas of steady job growth during the recession and anemic recovery, creating an average of 21,000 jobs each month, and 186,200 jobs in the first nine months of 2010.
Here's an illuminating factoid: Healthcare is responsible for 23,900 of the 65,000 jobs created in the entire economy in September—more than one-in-three new jobs.
Do you want a second opinion?
David Cherner is the managing partner at Health Workforce Solutions, LLC, and publishes the quarterly HWS Labor Market Pulse Index, which monitors healthcare sector job growth in the nation's 30 largest markets. He predicts that healthcare sector job growth will weaken for the remainder of the year, but overall, he remains optimistic.
"Despite a drop-off in near-term demand for the quarter, we remain convinced that healthcare hiring has generally improved over the last year and we expect it to continue through the remainder of the year," Cherner said.
"There are a number of large expansions projects that will be coming on line over the next few quarters and much of the negativity reflected in this quarter's numbers come from job cuts previously announced."
Hospitals and healthcare are subject to many of the forces that have battered the rest of the economy. But, as job creation machines, healthcare and hospitals are showing themselves to be resilient too. There will be fits and starts. There will be months when job growth slows, or even retreats. There will be more layoffs. Overall, the long-term forecast is good.
The Department of Health and Human Services says it will issue $727 million to 143 community health centers across the country for construction, expansion, and renovation projects through funds available from the Affordable Care Act.
Community health centers serve nearly 19 million patients, about 40% of whom have no health insurance. The health centers deliver preventive and primary care services at more than 7,900 service delivery sites around the country to patients regardless of their ability to pay. Charges for services are set according to income.
"There is no question that the economic downturn has made it harder for some Americans to get healthcare and important preventive services. Community Health Centers provide quality healthcare services to Americans across the country but are a life line for those who have lost coverage or are between jobs," HHS Secretary Kathleen Sebelius says.
"The newly constructed or expanded community health centers will provide care to an additional 745,000 patients and much needed employment opportunities in both rural and urban underserved communities," she said.
The Capital Development program grants, administered by the Health Resources and Services Administration, builds on the more than $2 billion investment in community health centers in the American Recovery and Reinvestment Act.
"Many of these community health centers need more modern space to meet the increasing patient demand for services," says HRSA Administrator Mary K. Wakefield, RN. "These funds will help community health centers build new facilities and modernize their current sites in their continuing effort to provide the best care possible to more and more people in need."
Over the next five years, the Affordable Care Act will provide $11 billion for the operation, expansion and construction of community health centers across the country to serve nearly double the number of patients receiving care, regardless of their insurance status or ability to pay.
A state by state list of Recovery Act investments in community health centers is available here.
Despite a projected record level hospital layoffs by the end of 2010, the sector reported 2,900 payroll additions in September, and 28,200 payroll additions so far this year, a rate of job creation that is more than double that for the same period in 2009, preliminary data released Friday by the Bureau of Labor Statistics shows.
Hospitals added 7,000 jobs in August—the largest single month of job growth for the sector in 2010—shed 1,400 jobs in July, added 5,700 jobs in June, and shed 1,900 jobs in May, after creating 15,900 jobs in the first four months of the year.
BLS data from August and September is considered preliminary and may be considerably revised in the coming months.
Hospitals have reported 28,200 payroll additions in the first nine months of 2010, compared with 12,100 payroll additions in the first nine months of 2009. The sector reported 86,200 payroll additions in the first nine months of 2008. Hospitals last reported sustained payroll reductions in 2000, when 2,200 jobs were lost between January and April, BLS data and preliminary data show.
The job growth comes even as hospitals mass layoffs of 50 or more employees are projecting to hit a new record for the year. BLS data show that there have been 102 mass layoffs resulting in 8,233 initial unemployment claims in the first eight months of 2010. The 2010 layoffs are on a pace to slightly surpass the record set in 2009, when hospitals reported 152 mass layoffs resulting in 11,787 initial unemployment claims.
The overall economy lost 95,000 jobs in September, as the nation's jobless rate held at 9.6%. The decline in payroll employment reflected the loss of 159,000 temporary jobs from the U.S. Census Bureau, while private sector payrolls increased by 64,000, BLS preliminary data show.
Job growth in the healthcare sector continues to be powered by ambulatory services, which accounted for 17,200 payroll additions in September, and 117,200 payroll additions in the first nine months of 2010. Nursing and residential care facilities reported 3,800 payroll additions, and physicians' offices reported 3,400 payroll additions, BLS preliminary data show.
The healthcare sector—everything from hospitals, to chiropractors' offices, blood and organ donor banks, to walk-in clinics—employed 13.8 million people in September, and has been one of the few areas of steady job growth during the recession and sputtering recovery, creating an average of 21,000 jobs each month, and 186,200 jobs in the first nine months of 2010. Healthcare created 215,300 jobs in 2009, and 719,900 jobs since the recession began in December 2007, BLS data and preliminary data show.
In the larger economy, 14.8 million people were unemployed in the United States in September, and 6.1 million of them were long-term unemployed who had been without a job for at least 27 weeks. However, the number of long-term unemployed has decreased by 640,000 since May, BLS preliminary data show.
Shortcomings in the Department of Defense's failed 13-year, $2 billion transition to electronic medical records were largely due to poor planning and execution, and a failure to appreciate the "significant complexity" of the program, the Government Accountability Office said.
DOD's EHR project—the Armed Forces Health Longitudinal Technology Application (AHLTA)—was expected to give the military's healthcare providers realtime access to health information for the 9.6 million active duty service members, their dependents, and other beneficiaries worldwide. However, the system hasn't met expectations.
GAO was asked by DOD to examine AHLTA's shortcomings as the military prepares to acquire a replacement system called EHR Way Ahead, for which the federal government has budgeted $302 million in fiscal 2011.
GAO found that AHLTA had met some benchmarks for outpatient care and dental care documentation, but that DOD had been forced to scale back other capabilities. "In addition, users continued to experience significant problems with the performance (speed, usability, and availability) of the portions of the system that have been deployed," GAO reported.
DOD has begun to improve system performance and enhance functionality and plans to continue to stabilize the AHLTA system through 2015, as a "bridge" to EHR Way Ahead. "However, it has not carried out a planned independent evaluation to ensure it has made these improvements. Until it ensures that these weaknesses are addressed, DOD risks undermining the success of further efforts to acquire EHR capabilities," GAO reported.
Weaknesses in acquisition management and planning processes contributed to AHLTA's persistent underperformance. GAO identified four problem areas:
A project management plan was not established to guide DOD's execution of the system acquisition.
A systems engineering plan did not exist to guide the "significant complexity" of the technical development.
Requirements were incomplete and did not reflect user and operational needs.
There was no plan to improve users' satisfaction.
EHR Way Ahead is expected to address performance problems, provide unaddressed capabilities such as comprehensive medical documentation, capture and share medical data electronically within DOD, and improve existing information sharing with the Department of Veterans Affairs.
DOD said it is acting on all of the GAO recommendations.
Houston-based Christus Health Systems will pay the federal government nearly $971,000 to settle whistleblower allegations that several of its hospitals in Texas and Louisiana fraudulently billed Medicare for ineligible costs and expenses and failed to disclose overpayments.
The settlement by Christus, which operates more than 40 hospitals and facilities in eight states, resolves a whistleblower's lawsuit that alleged fraudulent Medicare billings as far back as 1988 while others occurred as recently as 2001. The lawsuit had been under seal until this month, when a federal district court judge in Los Angeles unsealed the case.
The hospitals involved in the settlement include St. Mary's Galveston Hospital in Galveston, Texas; St. Michael's Health System in Texarkana, Texas; Christus Hospital—St. Elizabeth in Beaumont, TX; Christus Hospital—St. Mary in Port Arthur, TX; Christus Schumpert Health System in Shreveport, LA; Christus St. Frances Cabrini Hospital in Alexandria, LA; and Christus St. John Hospital in Nassau Bay, TX.
Christus Health paid the settlement without admitting any wrongdoing.
The whistleblower lawsuit was filed in 1998 by Mark Razin, a former employee of Healthcare Financial Advisors, a California-based consulting firm that helped hospitals prepare cost reports that were submitted to Medicare/Medicaid. The lawsuit alleged that HFA helped hospitals seek reimbursement for unallowable costs and helped conceal known overpayments from the government, federal prosecutors said.
HFA also allegedly helped hospitals reopen previously filed cost reports to seek reimbursement for costs that it had inadvertently failed to claim in its original cost reports, while simultaneously concealing from Medicare overpayments the hospitals knew they had received on account of the original cost reports, federal prosecutors said.
The settlement with Christus is the latest and last in a series of settlements with nine hospital defendants in the whistleblower suit that have cumulatively paid approximately $61 million to the federal government, including: a 2007 settlement in which the Loma Linda Behavioral Medicine Center in Redlands, CA, paid more than $2 million; and the 2006 settlement in which Jackson Memorial Hospital in Miami, FL, paid $14.25 million.
The settlement was negotiated by the United States Attorney's Office in Los Angeles.
Six independent pharmacies in Texas have filed a federal law suit against CVS Caremark charging the drug retail giant and pharmacy benefits manager with violations of the Racketeer Influenced and Corrupt Organizations Act and trade secret misappropriation.
The complaint also alleges that CVS Caremark contracts requiring patients to buy maintenance medications only from CVS Caremark violate Texas' "Any Willing Provider" law.
"CVS Caremark traps patients and non-CVS retail pharmacies in a scheme to deny patient choice of pharmacy and to smother business competition," said Amanda Gohlke Fields, general counsel for plaintiffs American Pharmacies, a for-profit, member-owned pharmacy wholesale buying group.
CVS Caremark corporate spokeswoman Christine K. Cramer said the company is reviewing the suit. "CVS Caremark is confident that its business practices and service offerings, which are designed to reduce healthcare costs and expand consumer choice, are being conducted in compliance with applicable antitrust, privacy and other laws," Cramer said.
The suit claims CVS Caremark violates the firewall between the retail pharmacy and the pharmacy benefits manager divisions as required when the Federal Trade Commission approved the CVS and Caremark 2007 merger. Instead, the combined company built an information technology platform that straddles all of CVS Caremark's business segments, capturing in-depth patient data for marketing and other purposes in violation of HIPAA patient privacy laws, the suit alleges.
Patient information gathered from non-CVS pharmacies includes names, addresses, birth dates, medical diagnoses, prescription histories, and prescribing physicians. CVS Caremark mines the accumulated patient- and pharmacy-specific data to identify individual patient buying practices, their physicians' prescribing practices, and individual pharmacy business volume, the suit alleges.
American Pharmacies says patients report being forced, via higher copayments and refusal to cover maintenance medications, to leave their pharmacy where the patient and pharmacist have a professional and personal relationship. Other patients report moving to a CVS Caremark network pharmacy out of fear of losing all health insurance coverage, the suit alleges.
Woonsocket, RI-based CVS Caremark contacts patients via direct mail and phone calls about their prescriptions, urging, and in some cases mandating, plaintiffs' patients to use CVS Caremark retail or mail order stores. The patients' physicians also are targeted to change prescribing practices to include drugs from CVS Caremark-favored drug makers, the suit alleges.
"The defendants have an ambitious plan to take over 200 independent pharmacies per year," Fields said. "Taking trade secrets from their competitors' business records and excluding plaintiffs from CVS Caremark's pharmacy networks plays right into their plan. Knowing just how vulnerable a non-CVS pharmacy may be puts that pharmacy squarely in CVS Caremark's crosshairs."
The American Pharmacies plaintiffs want triple damages for the RICO violations, and an injunction barring CVS Caremark's practices in the future. The trade secret misappropriation claim includes a request for exemplary damages.
Whether by choice, cost, or lack of alternatives, patients are increasingly turning to their primary care providers for mental health services, a study from the Center for American Progress shows.
More than half of treated patients now receive some form of primary care for their mental disorder, mostly from a primary care doctor, and primary care is now the sole form of healthcare used by more than one-third of patients with a mental disorder accessing the healthcare system, said the study Mental Health Care Services in Primary Care: Tackling the Issues in the Context of Health Care Reform.
The study's author, Lesley Russell, said improving the integration of mental health services needs to be addressed as healthcare reform centralize primary care in the delivery and coordination of healthcare.
Key issues to address include:
Mental health workforce shortages and distribution problems
The ability of the primary care workforce to diagnose and treat mental health disorders
The lack of financial incentives for primary care providers to deliver mental healthcare
Insurance and financial barriers for patients seeking treatment for mental health disorders
Patients’ perceptions and fears that are barriers to accessing appropriate treatments for mental health disorders
The quality of mental health services
Co-morbidities of mental health disorders with physical illness and substance abuse
The need for early diagnosis and intervention
Racial and ethnic disparities in mental health services
The structure of the healthcare system as an impediment to the integration of mental health services
Suburban Chicago's Delnor Health System and Central DuPage Health have announced plans to merge and create a single, integrated health system.
The two systems have signed a memorandum of understand, and will undergo due diligence over the next several months, with the hope of expanding and broadening healthcare services for Chicago's western suburbs. The final agreement is subject to government approval.
"This relationship holds such great potential for making healthcare even better for our patients, physicians and staff at a time of unprecedented change in the industry," said Thomas L. Wright, president/CEO of 159-bed Delnor Hospital, in Geneva, IL, in a joint media release. "The two hospitals have a deep respect for one another's teams of highly talented professionals, dedication to innovation and track records in providing high quality care. Further collaboration will strengthen our ability to provide exceptional levels of clinical care and become more responsive to the new requirements of healthcare reform, while also delivering an extraordinary patient experience."
Luke McGuinness, president and CEO of CDH, which includes the flagship 313-bed Central DuPage Hospital in Winfield, IL, said the merger would: "build on the momentum of our respective investments in primary care, specialty care and advancement of the destination service lines at both campuses. Together, Delnor and CDH will build a health system synonymous with efficient, high quality, advanced care in the communities we serve."
The memorandum of understanding names McGuinness CEO of the new health system, but he and Wright will continue to oversee their respective hospitals through the due diligence process. Wright will continue as both president of Delnor and as an executive leader of the new health system. The new health system would be governed by a board of directors with equal representation from Delnor's and CDH's current boards.
