Three of the top 10 insurance fraud cases in 1995 featured healthcare scams, according to the Coalition Against Insurance Fraud, a Washington-based group sponsored by insurance companies, consumer groups and government organizations.
Each year, the CAIF releases its Top 10 scam list, and each year healthcare fraud accounts for a good portion of the estimated $80 billion in insurance losses.
No. 4 on the list was Beverly Hills physician Mark Kaplan, who was sentenced to eight years in prison for bilking medical insurers out of about $30 million. Kaplan and his wife, Polina Ioffe, who was sentenced to two years, were ordered to pay
$7.5 million in fines and restitution.
No. 6 was Caremark International, Northbrook, Ill. Last June, Caremark agreed to pay $161 million in criminal and civil fines for paying kickbacks to physicians and submitting false billings to the government. Caremark also agreed to cancel 2,000 contracts with physicians.
No. 7 was Amerimed Medical Corp., a Los Angeles-based company charged with ripping off medical insurers through $30 million to $50 million in false billings. Twelve Amerimed executives were indicted on 50 counts of billing insurers with inflated claims.
Caremark's legal problems didn't stop it from being named among the 100 best corporate citizens by Business Ethics magazine.
Caremark ranked No. 86. Other healthcare companies on the list include device maker Medtronic, No. 5; Medicaid HMO operator United American Healthcare, No. 12; Humana health plans, No. 39; and software vendor CyCare Systems, No. 68.
In assembling the list for the first time, the Minneapolis-based magazine gave equal weight to strong earnings and social factors such as employee ownership, women and minorities on the board and in the work force, and the presence of an ethics code.
Factors in Caremark's favor were its charitable contributions (3% of pretax income compared with 1% or less for most firms); having one woman on its board of directors (most companies have none); and its strong financial performance.
Outliers wonders whether the 3% charity figure mentioned in the magazine included a $2 million grant Caremark paid last year to the Ryan White Comprehensive AIDS Resources Emergency (CARE) Act as part of its settlement with the federal government. A Caremark spokeswoman contacted last week said no one in the company could give an answer.
Take it from a doctor: Gluttonous consumption of physician practices could be hazardous to your hospital's financial health.
"Spending large amounts of money on buying physician practices is generally a poor investment," contended Molly Joel Coye, M.D., who served as senior vice president of San Jose, Calif.-based Good Samaritan Health System until January, when it was acquired by Columbia/HCA Healthcare Corp.
Coye-who's also served as director of the California Department of Health Services, New Jersey's health commissioner, and head of public health at the Johns Hopkins School of Hygiene and Public Health-aired her contrarian opinion at a meeting on the future of healthcare in New York state sponsored by the Hospital Trustees of New York State.
Hospitals are paying top dollar for physicians, assuming they'll remain loyal. But you can't really "buy physicians," she said. "There's no way to permanently lock them into the hospital network." So the value of those practices erodes, she said.
And there's another complication: As managed-care penetration increases, fewer physicians will be needed because people's care will be better managed, Coye added.
Some hospitals are going to lose a lot of money on physicians, agreed Michael R. Irwin, a director in Smith Barney's public finance department. "Practice management is very different from hospital management." The key, he said, is building the proper incentives and putting a physician in charge.
Richard Scott may hold down all the key management titles at the nation's largest for-profit healthcare provider and is probably the most powerful individual in the nation's largest business sector, but until last week he hadn't made the A-list.
Time magazine named Scott, 43, to its list of the nation's 25 most influential people. The article lauded the chairman, chief executive officer and president of Columbia: "In an industry notorious for waste and inefficiency, Scott aggressively consolidates operations and imposes cost controls. By creating an interlocking system of healthcare delivery that offers everything from complex surgery to home therapy, Columbia has attracted business from the insurance companies that have in turn fostered the managed-care revolution."
And nary a word about charity care was spoken.
Now that Outliers has heard from everyone east of the Mississippi about our error, we can only chant: We goofed, we goofed, we goofed.
Yes, we had momentary brainlock and identified the capital of Kentucky as Louisville (May 20, p. 116). Yes, we know it's really Frankfort. We didn't know that the Bluegrass State had so many admirers in healthcare, all of whom called to set us straight. At least we know people are reading.