The HCA Windfall

HCA, the hospital system which controls 163 hospitals from New Hampshire to California, has seen its profits soar recently.  There is a whole NYT article explaining their success.   Of course, the author had to bring in Bain and Romney, but this really should not be about politics.   Equity firms survive to make money.  If your company  finds a way to do that then equity firms will invest in you.   If fact, HCA’s success has “inspired 35 buyouts of hospitals or chains of facilities in the last two and a half years by private equity firms eager to repeat that windfall.”   I still believe in capitalism, especially in the healthcare field, but like anything else, it could go too far.   The first problem is fraud, which HCA is now being investigated for (i.e. doing procedures on people who do not need them).  The other problems can be out and out greed perpetuated by administrators to the detriment of the patients.    The article explains that HCA’s success is due to:

  • Figuring out how to get more revenue from private insurance companies, patients and Medicare by billing much more aggressively for its services than ever before (one medical axis fighting another axis of evil is fine with me)
  • Finding ways to reduce emergency room overcrowding and expenses (I believe they are onto something here because are NOT treating patients with non-urgent unless they pay upfront)
  • Experimenting with new ways to reduce the cost of its medical staff (this is the biggest problem I have with HCA and all due to administrator greed)

I recommending reading the piece.  While I commend anyone who finds ways to ethically make healthcare more profitable, I get sick to my stomach when I see how the suits are destroying the patient/doctor/nurse relationship.    The biggest questions that were not asked by the NYT were:

  • How many administrators work at HCA?
  • What is the ratio of administrators to doctors?
  • How much do these administrators make?


Douglas Farrago MD

Douglas Farrago MD is a full-time practicing family doc in Forest, Va. He started Forest Direct Primary Care where he takes no insurance and bills patients a monthly fee. He is board certified in the specialty of Family Practice. He is the inventor of a product called the Knee Saver which is currently in the Baseball Hall of Fame. The Knee Saver and its knock-offs are worn by many major league baseball catchers. He is also the inventor of the CryoHelmet used by athletes for head injuries as well as migraine sufferers. Dr. Farrago is the author of four books, two of which are the top two most popular DPC books. From 2001 – 2011, Dr. Farrago was the editor and creator of the Placebo Journal which ran for 10 full years. Described as the Mad Magazine for doctors, he and the Placebo Journal were featured in the Washington Post, US News and World Report, the AP, and the NY Times. Dr. Farrago is also the editor of the blog Authentic Medicine which was born out of concern about where the direction of healthcare is heading and the belief that the wrong people are in charge. This blog has been going daily for more than 15 years Article about Dr. Farrago in Doximity Email Dr. Farrago – [email protected] 

  5 comments for “The HCA Windfall

  1. August 22, 2012 at 10:20 am

    Question: The purpose of a society’s efforts to provide healthcare for its citizens should be based on:
    a. Making maximum profit for someone.
    b. Providing healthcare for its citizens.

    • pat
      August 22, 2012 at 11:44 am

      Counter-questions: (1) Can a material good or service ever be a “right”?
      (2) If society chooses answer ‘B’, then how shall it regard those chosen to fulfill its wish; how shall the majority of society be regarded by the minority then so-directed?

    • SGE
      August 22, 2012 at 12:31 pm

      Rick Scott’s Role in Largest Medicare Ripoff in History:
      Miami Herald Probe
      Sunday, June 27, 2010 08:38 PM

      Current Governor of Florida

      Just what was Rick Scott’s role in the largest ripoff of taxpayers in the history of Medicare and Medicaid?

      According to an investigative report published in Sunday’s Miami Herald, Scott will have a difficult time distancing himself from the company he once ran and its “notorious legacy of fraud.”

      Scott had founded the healthcare giant Columbia/HCA and was the CEO in the mid-1990s when the FBI launched a massive probe of its billing practices.

      “Scott resigned in 1997 amid an FBI probe that ultimately led to the company paying a record $1.7 billion in criminal and civil fines for Medicare fraud,” the Herald stated.

      Scott wouldn’t comment to the Herald on the allegations, but did say in a statement that he was never charged with a crime and never questioned by the FBI.

      Here are the key points made in the article:

      “However, federal investigators found that Scott took part in business practices at Columbia/HCA that were later found to be illegal — specifically, that Scott and other executives offered financial incentives to doctors in exchange for patient referrals, in violation of federal law, according to lawsuits the Justice Department filed against the company in 2001.”
      “The doctor payments were among 10 different kinds of fraud identified by the Justice Department in its 10-year probe of the company, records show. Three years after Scott left Columbia/HCA, the company admitted wrongdoing, pleading guilty to 14 felonies — most committed during Scott’s tenure — in addition to paying two sets of fines totaling $1.7 billion.”
      “The key question for Scott is whether he can persuade voters that he deserves to be chief executive of Florida while at the same time insisting that he knew nothing about the greatest Medicare fraud in American history as it happened under his nose.”
      “Chief among the critics: some 30 whistleblowers — company employees, doctors and contractors — who first exposed the frauds in lawsuits filed against Columbia/HCA between 1993 and 1997. Some employees said they were fired or punished for raising their concerns with supervisors; one said she was instructed by her boss to erase records from her computer at a Miami Beach hospital, court records show. The whistleblowers and their lawsuits helped guide the Justice Department’s decade-long probe of the company.”
      “The company also admitted making illegal kickbacks to doctors in exchange for patient referrals — a scheme that federal investigators traced back to the very first hospitals purchased under Scott in El Paso, court records show.”
      “From Columbia’s beginning, Scott and his partners sought to increase revenue at their hospitals by seeking patient referrals from area physicians, the Justice Department said. To win over doctors, they offered sweeteners, from lavish trips — fishing in Costa Rica, dove hunting in Mexico — to free office rent, discounted pharmaceuticals, and bogus consulting jobs, according to investigators.”
      In addition to the doctor payments, whistleblowers inside and outside the company — from Miami to remote Montana — also questioned Columbia/HCA’s methods of billing Medicare. The questions eventually led to a federal investigation — and $900 million in fines.

      About $400 million of the fines came from cheating on direct patient billing — called upcoding — in which Columbia/HCA filed claims stating that patients were sicker than they really were.

      Read the entire story, “Rick Scott and his role in Columbia/HCA” at The Miami Herald.

      • August 23, 2012 at 12:43 am

        Not exactly a ringing endorsement of government health care, either. (I truly don’t know, but are incentive payments illegal in other industies.)

  2. Pat
    August 20, 2012 at 8:16 am

    – I don’t think capitalism can go to far; what is described herein is corruption, by definition the antithesis of capitalism (hey, I’m an ideologue. But speaking of corruption, who was a major influence on health care policy for years, but former senate majority leader and sone of HCA founder, Bill Frist, himself also a big supporter of Bush’s “Free Drugs For Old Peopls’ Votes” Program, a.k.a. Medicare Part D.
    – Yay for HCA if they really did reduce ER overcrowding. At the HCA facility at which I worked for a decade, they would screen anyone with a non-emergent complaint for payment up front, EXCEPT: kids 2 or younger, and anyone 65 or older, reasoning that they were all Medicaid or Medicare. After complaints from the welfa-, uh, adult Medicaid crowd at being asked to pay a nominal charge for a non-emergent complaint, they waived the screening for them as well. The result was that the ony folks asked to pay up front were the uninsured working folks, which was grossly unfair to them.

    – and yes, HCA represented a big arm of the axis of evil, being fat with administrators, sub-administrators, those that prepped for JCHAO, and those that prepped for the preppers, and apparently a vast complex of bean counters. When last I worked there, the RN filled out 13 (!) separate forms just to riage a sore throat!

Comments are closed.