Rep. Fortney "Pete" Stark (D-Calif.) last week asked HCFA to investigate Columbia/HCA Healthcare Corp. for what Stark called "questionable practices" and possible violations of the physician self-referral laws named after Stark. The Stark laws prohibit physicians from making a variety of Medicare and Medicaid referrals to entities in which they have a financial interest. In a letter to HCFA, Stark, the ranking Democrat on the House Ways and Means health subcommittee, asked HCFA to investigate Columbia's physician partnerships to see if they violate referral laws. Stark said he received a letter from an anonymous Oklahoma physician who was solicited by Columbia for a partnership arrangement at Columbia's Edmond (Okla.) Regional Medical Center. The physician said a Columbia official explained that if physicians invested $15,000 and increased utilization they would receive earnings of $10,000 a year and their investment would increase "to the $100,000 plus range." Columbia spokesman Jeffrey Prescott reacted to the allegation by saying, "We review our contracts with great vigor, and we are in compliance." He noted the federal self-referral laws have an exemption for hospital joint ventures. Columbia has such ventures, in which physicians own a 20% interest, in 10 markets.
The average total compensation of the chief executive officers of multihospital systems far exceeded that of the CEOs of system-affiliated hospitals or stand-alone hospitals, according to a report released late last week by the New York office of Ernst & Young and the Center for Healthcare Industry Performance Studies of Columbus, Ohio. The average total 1995 compensation for system CEOs was $324,200; for system-affiliated hospital executives, $210,200; and for stand-alone hospital executives, $185,300. The report is based on compensation data from 248 hospitals.
The U.S. Justice Department has determined a medical residency association restrained trade by issuing guidelines that governed the recruitment of residents. It filed a civil suit and proposed final judgment in federal court in Kansas City, Mo., against the Association of Family Practice Residency Directors to "stop the association from using `ethical' rules to restrict competition among its members." The association, which was formed in 1989 and has 427 members, is affiliated with the American Academy of Family Physicians in Kansas City. The complaint portrays the association as a cartel that used its guidelines to deprive residents of their economic rights. The association said it cooperated with the government investigation and that no fines or other penalties had been levied.
A federal judge has dismissed a lawsuit brought by a group of anesthesiologists who contended that Aetna Health Plans of New York violated antitrust law by coercing physicians to join the HMO (Aug. 28, 1995, p. 22). In a press release announcing the decision, Aetna said U.S. District Judge Denise Cote in New York found that the providers had no legal basis to bring the action. Aetna said the decision establishes its right to set standards for its providers. Also last week, U.S. District Judge Denis R. Hurley in Hauppauge, N.Y., refused to block Aetna from terminating physicians who balked at switching to a capitation payment system. "This decision is a terrible blow for parents whose children suffer from serious illness and are covered by HMOs," said Mara Maltz, the plaintiff in the case. Maltz's two children, who suffer from Crohn's disease, are being treated by a physician who declined to accept Aetna's capitation arrangement (Jan. 8, p. 22).
Detroit-based Michigan Health Care Corp. has accepted the resignation of its president and chief executive officer, Charles E. Housley. Housley, who has been at the helm since 1990, decided to move on to other opportunities, a hospital spokeswoman said. Until a permanent replacement is found, responsibility for operations will be assumed by Bernard O'Neil, vice president at Brentwood, Tenn.-based Quorum Health Resources. O'Neil has worked at Michigan Health Care for more than a year as a consultant. The not-for-profit system has been working to extricate itself from Chapter 11 bankruptcy since it sought such protection in March 1995. Michigan Health Care said it expects a reorganization plan to be approved this year. The system includes 240-bed Michigan Hospital and Medical Center and 140-bed Aurora Hospital for Children, a psychiatric facility in Detroit. Last fall, it announced the closure of its 70-bed psychiatric facility, Montgomery Hospital in Westland, and three walk-in clinics.
The Department of Veterans Affairs healthcare system's fiscal 1997 budget would be $17 billion, equal to the Clinton administration's budget request, under legislation that has cleared a House Appropriations Committee panel. That would represent a $444 million increase over fiscal 1996 funding. The committee's VA panel also approved a $229.2 million budget for major construction projects-$28 million less than the VA requested but $93 million more than fiscal 1996-for fiscal 1997, which begins Oct. 1.