Auditor: 15-bed Missouri hospital at heart of $90M billing fraud scheme

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Putnam County Memorial Hospital, a 15-bed hospital in Unionville, Mo., received $90 million in insurance payments in less than a year for lab services that were performed at other facilities across the country, according to The St. Louis Post-Dispatch, which cited a report released Wednesday by Missouri State Auditor Nicole Galloway.

According to Ms. Galloway’s report, Putnam County Memorial Hospital contracted with Hospital Laboratory Partners in September 2016 to operate a clinical laboratory on behalf of the hospital.

“Immediately upon signing the management contract with the hospital, the CEO and his associates began billing significant amounts of out-of-state lab activity through the hospital,” according to the auditor’s report.

Putnam County Hospital allegedly acted as a shell company by submitting claims for other labs and funneling the insurance payments through the hospital.

“Based on our review of hospital accounts, the vast majority of laboratory billings are for out-of-state lab activity for individuals who are not patients of hospital physicians,” states the auditor’s report.

Ms. Galloway has turned her findings over to the Missouri attorney general, the FBI and the Putnam County prosecuting attorney, according to KCUR.

On Thursday, Hospital Laboratory Partners said the auditor’s report mischaracterizes the payments. The company said Putnam County Hospital, a critical access hospital, is authorized to bill for off-site lab work.

“The assignment of non-patient lab specimens has been standard practice for rural and critical access hospitals for many years,” Hospital Laboratory Partners attorney Mark Thomas said in a statement to The Kansas City Star“The purpose of the rural/critical access exceptions is to give rural healthcare facilities a fighting chance to survive and serve their local communities.”


Bon Secours Richmond CEO orders managers, others to take paid leave to reduce expenses

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Bon Secours Richmond (Va.) Health System CEO Toni Ardabell, BSN, issued an order July 19 mandating select salaried workers at the health system take five paid days off to reduce the health system’s expenses by the end of its fiscal year Aug. 31, according to the Richmond Times-Dispatch.

A health system spokesperson said in a written statement to the Times-Dispatch Aug. 10 the order applies only to salaried management and professional personnel who accrued a large number of paid vacation days but had not used them during the first 10 and a half months of the fiscal year. The rule does not apply to employees who “have little or no accrued PTO … [or] those who have just returned from a leave of absence or those who may be getting ready to take one,” the spokesperson said.

Ms. Ardabell’s memorandum, obtained by the Times-Dispatch, called for “full compliance with these instructions,” provided the stipulation does not affect patient care or reduce patient volume. She also wrote management should not attempt to replace employees on leave with “other workers in a way that adds incremental expense.”

“Replacing a salaried employee with an hourly employee you have to pay doesn’t help,” Ms. Ardabell wrote. “However, if another salaried employee who is being paid anyway simply stretches to cover the work of two people for a few days, then we realize the savings.”

The spokesperson said the order does not reflect any financial distress at the health system. Bon Secours is “a financially strong and fiscally sound organization with consistently high bond ratings and financial performance,” she told the Times-Dispatch.

More Memorial Hermann execs to depart

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Three more executives plan to leave Memorial Hermann Health System, Houston’s largest nonprofit health care system, according to multiple reports.

Last week, Arizona-based Banner Health announced it hired Dennis Laraway as CFO, effective Sept. 29. Laraway has been CFO of Memorial Hermann since 2011.

Following the announcement, Modern HealthcareHealthcare Finance and others reported that two other executives plan to step down. Memorial Hermann spokeswoman Alex Loessin confirmed to the publications that Christopher Lloyd, CEO of Memorial Hermann’s physician network, and Jim Garman, chief human resources officer, also plan to leave. That’s in addition to Craig Cordola, president of Memorial Hermann Health System’s west region, whose departure was announced earlier this month.

The reports did not specify when Lloyd and Garman will step down or what their next positions will be. Cordola, however, will become senior vice president of St. Louis-based Ascension Healthcare and ministry market executive of Ascension Texas, effective Sept. 1. Memorial Hermann is evaluating a successor for Cordola internally, Loessin previously told the Houston Business Journal.

“Career moves by top leaders to other signature health systems speak volumes about the caliber of talent we have at Memorial Hermann,” CEO Chuck Stokessaid in a statement to the publications last week. “While we will miss the contributions of these individuals to the organization, I’m incredibly proud of all they accomplished, and I wish each of them the very best. We have a strong management team at Memorial Hermann and excellent support from our board.”

Stokes was named CEO for Memorial Hermann in early July. He had served in an interim capacity for a few weeks after Dr. Benjamin Chu abruptly stepped down from the position June 19.

Molina to cut 1,400 positions to improve financial performance

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The cuts follow removal of CEO and CFO due to financial losses blamed on Affordable Care Act market.

Molina Healthcare, which fired its CEO and CFO in May due to the poor financial performance of the company, will eliminate about 1,400 jobs over the next few months, according to an internal memo obtained by Reuters.

The cuts are due to financial losses blamed on Molina’s individual business in the Affordable Care Act market, in which it has been a major player.

Molina will reduce its workforce by the elimination of 10 percent of its 6,400 corporate positions and about 10 percent of 7,700 health plan jobs, according to Reuters. It will not affect Molina’s Pathways behavioral health business, which employs about 5,500 people.

Interim CEO and CFO Joe White sent the memo to employees saying the cuts aim to contribute to savings by 2018 in what he called “Project Nickel,” to do more with less.

In March, Molina was touted as an ACA success story.

Former CEO J. Mario Molina, MD, was an outspoken opponent of the Republican plan to repeal and replace the ACA. His brother, John C. Molina, who served as CFO. was also let go in a decision by the board to turn around the company’s financial position.

Last week Molina said it was concerned about Republicans repealing the ACA without having a replacement plan in place, the roll back of Medicaid expansion and the lack of a guarantee of federal cost-sharing reduction payments, which allows insurers to offer lower-income consumers lower deductibles and out-of-pocket expenses.

Molina also argued for the continuation of the individual mandate to get insurance.

“The bedrock of any coverage system is a requirement that people must obtain health insurance,” Molina said. “The lack of such a requirement will be detrimental to the individual market risk pool and will result in adverse selection, which would significantly increase costs.”

In June, Molina said it would file rates for 2018 to remain in the exchange market in Florida.

The California Department of Insurance is releasing on August 1 the insurers which have filed rates for the ACA market in 2018.

Healthcare CEO pay climbs steadily since ACA passage

Dive Brief:

  • Earnings of healthcare CEOs have continued to grow under the Affordable Care Act (ACA) and the pay packages give them little incentive to rein in spending, a new Axios analysis concludes.
  • Since the ACA was passed in 2010, CEOs of the 70 largest healthcare companies have cumulatively earned a whopping $9.8 billion — or almost 11% more money on average each year. However, because most of the pay is in vested stock, CEOs often base decisionmaking on what boosts stock prices (e.g., bigger sales, more tests and procedures) and not the ACA goals of patient-centered, value-based care.
  • The analysis was based on financial reports from 70 publicly traded U.S. healthcare companies comprising more than $2 trillion in annual revenues. Not-for-profit hospital CEOs were not included.

Dive Insight:

The biggest payout — $863 million — went to John Martin, CEO of biotechnology company Gilead Sciences, according to the analysis. Other takeaways include:

  • Just four of the 113 healthcare CEOs in the analysis were women
  • 11 of the top 20 top earners were CEOs of pharma and drug-related companies;
  • CEOs earned a little less as a whole last year versus 2015 due to market uncertainty over the presidential election.

Rising salaries are drawing increased scrutiny and some pushback. In April, North Carolina lawmakers approved a bill that would bar compensation for CEOs of behavioral health managed care organizations from exceeding by more than 30% the average salary of other behavioral health managed care businesses in the state. The bill seemed targeted at Cardinal Healthcare Innovations CEO Richard Topping, whose salary was $435,000 more than the average salary for a managed care organization in the state.

Salaries of executives at nonprofit organizations have also been growing. According to a Wall Street Journal report in March, many nonprofits are embracing salary strategies used in the for-profit world and offering packages totaling more than $1 million, with possibility of bonuses and deferred payments. In 2014, about 75% of nonprofit pay packages totaling $1 million or more went to healthcare executives.

In Massachusetts, in fact, pay for hospital CEOs outpaced state health spending. The largest compensation package went to Elizabeth Nabel, president of Brigham and Women’s Hospital, who received $5.4 million in 2014, up 119% from the previous year. By contrast, overall healthcare spending in Massachusetts rose 4.8% that year.

In an analysis earlier this year, Axios found that Sutter Health CEO Patrick Fry gets paid the most per patient stay ($6.88 a day) among the 20 largest hospital systems. Greenwich Hospital CEO Norman Roth earned the most ($56.40 a day) among other studied hospitals.


Building a ‘nimble’ multi-state health system: 5 questions with Ascension CEO Dr. Anthony Tersigni

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With 2,500 sites of care — including 141 hospitals and 30 senior living facilities that sprawl across 23 states and Washington, D.C. — St. Louis-based Ascension may not seem well-suited to make sudden business changes. But Ascension President and CEO Anthony Tersigni, EdD, aims to make the nation’s largest nonprofit health system into one of America’s most agile hospital networks.

Here, Dr. Tersigni discusses the system’s recent national rebrand, how he instills a spirit of risk-taking and innovation and the issues he is focusing on over the next five years, despite uncertainty on Capitol Hill.

Question: What prompted the decision to rebrand Ascension’s healthcare facilities? What effect has the rebranding had within the organization and outside in the communities it serves since being implemented in 2016?

Dr. Anthony Tersigni: In 1999 we decided not to brand Ascension because the brand equity was in the local entities. But since then, we believe we’ve made enough inroads in safety, quality and high-reliability that we felt Ascension has developed a reputation of its own. How do we combine the national reputation with the local reputation? Since co-branding the Ascension name with the names of our hospitals in our communities in advertising and on the web, the results have been outstanding. It’s about making it easier for the people we serve to navigate our system within a particular community because they now understand we’re all connected. We’re going to roll this out throughout the country, but we’re doing it in a sequential way because it’s very costly. But we believe now is the time to position ourselves as the national system that we are.

Q: What are your primary goals for the organization for the next five years?

AT: We want to continue to grow our primary care, expand access and continue to move toward value-based care. We want to be able to take on risk in a way where we can move into first-dollar coverage so we can move the patient through the continuum of care. We promise healthcare that works, that is safe and that leaves no one behind — for life. For us to do that, we need to be able to put patients in the right setting for the right care at the right time. If we can take on risk and walk with our patients and their families through our clinically integrated systems of care, we believe we can keep them well.

When it comes to population health management, the mindset is we need to change the way we look at our current business. We are moving from fee-for-service, where we get paid for doing things, to fee-for-value, or how to keep people well. We’ve been so successful as a hospital company under fee-for-service, and now we have to change the mindset and culture of all of these stakeholders. We have to go in a different direction. It’s like changing a flat tire on a car while it’s moving. No one has figured out yet how to do it, but you’re going to have to figure it out.

Another priority is mental and behavioral health. That’s very important to us. It’s a core part of our mission, and we want to be partners with whoever else sees that as a key component.

Q: What are the most important management practices when leading such a vast system with thousands of employees?

AT: In the 18 years since we created Ascension, we’ve been trying to have a culture that’s transparent, candid and nonpunitive. That’s a dramatic departure from the healthcare industry of old. I like to think I surround myself with really bright individuals and subject matter experts, and I try to empower everyone to do what’s in the best interest of those we serve. That’s what this is really all about. I like to think I hire people who are brighter than I am and give them the resources to do their jobs. Then I get out of the way.

That’s one of the principles we try to instill in our Leadership Academy — a program where we take high-potential employees for two to three years and help them develop. They focus on spiritual health to better understand their inner self. The second thing is leadership development. Everyone comes to us with certain gifts. We want them to hone those gifts and develop other skills. And the other piece, which people don’t talk about often, is personal health and vitality management. We expect our executives to work eight, 10 or 12 hours per day at optimal performance level. That’s virtually impossible unless you understand the physiology of your body.

Q: How would people describe you personally as a boss?

AT: My job is to allow leaders across the country to do what they are capable of doing. I like to think I am the supporting cast to what they do, and therefore I want to give them as much leeway and support as possible, and I want them to take risks. I am a risk-taker. As long as you don’t hurt people, that’s how we learn — through making mistakes. So take that risk.

Q: How do you plan for the future amid the current uncertainty surrounding healthcare policy?

AT: We need to be the highest-quality, lowest-cost, best-outcome provider in every market that we’re in. Then regardless of what happens in Washington D.C., we are going to be there for our patients and they’re going to want to seek us out.

We are working to do our part to reduce costs and cut waste in healthcare. But at the other end of what we do are human beings whose lives can either be helped or ruined by our actions or inactions. We are constantly advocating as a voice for the voiceless because many of those folks don’t get a chance to have this kind of conversation. I feel compelled to represent them because we are at ground zero in terms of healthcare. We see the pain and suffering that’s happening in society. They are in our clinics; they’re in our emergency rooms; they’re in our hospitals; they’re in our nursing homes.

I spent a couple weeks on Capitol Hill meeting with every senator I could meet and say, “Look, we want to be a resource. If you have a policy idea, let us know what that is and we will tell you the practical implications of that policy on the people we serve.”

We will continue to advocate for the poor and vulnerable. Last year we provided $1.8 billion of community care, community benefit and charity care. Given where this is going, I believe that number is going to go up next year. Because we are a faith-based, Catholic organization, we are going to continue to serve those people. If it ends up being over $2 billion, we’re going to figure out a way to serve them. We have to do so until we find a national solution here.