COLUMBIA OFF GAO SELF-REFERRAL HOOK
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October 28, 1996 12:00 AM

COLUMBIA OFF GAO SELF-REFERRAL HOOK

David Burda
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    The focus of the upcoming General Accounting Office study of not-for-profit hospital conversions has shifted away from patient referral patterns to what hospital foundations do with the money after their hospital is sold.

    That change in focus lets Columbia/HCA Healthcare Corp. off the GAO's self-referral hook.

    The original focus of the study, requested by Rep. Fortney "Pete" Stark (D-Calif.), was changes in patient referral patterns after not-for-profit hospitals are taken over by for-profit hospital chains and physician investors.

    The focus was changed because of resource issues, according to James McClyde, assistant director at the GAO.

    "We wouldn't want to do the same thing another agency is doing. Others are looking at self referral," he said. "We talked with Stark's staff about what the GAO could do and that it might be best to look at another issue."

    The patient referral issue has been a hot button for Stark, who has sponsored laws against provider self-referrals. In May, he sent a letter to HCFA that urged the agency to investigate Columbia to determine whether the chain's partnership deals with physician investors violate federal physician self-referral laws (June 3, p. 4).

    Despite a meeting with Columbia executives held shortly after the letter to HCFA, Stark turned up the heat on the country's largest for-profit hospital chain by asking the GAO to study how patient referral patterns change when hospitals cut business deals with doctors.

    In a July 8 letter to the GAO, Stark said, "I am concerned about anecdotal reports that these new economic relationships are creating a serious problem for public and nonprofit hospitals, because the physician groups tend to `skim' the healthiest and best insured patients, referring them to the hospitals with which they have financial ties, while uninsured or expensive patients are referred to the public or other hospitals in the community."

    Columbia executives were scheduled to meet with Stark in September in a second attempt to cool his push for an investigation of the company by HCFA and HHS' inspector general's office, but they canceled the meeting shortly after Stark called Columbia executives criminals in a speech to the American Medical Group Association.

    Columbia then tapped Thomas Scully, president of the Federation of American Health Systems, to be a go-between to resolve questions Stark has raised over the chain's practices. Scully met with Stark's staff on Sept. 20, but both sides agreed not to discuss the results of the meeting publicly.

    At about the same time, Sarah Jaggar, director of health services quality and public health issues at the GAO, was negotiating with Stark's office over the focus of the study he had requested, Jaggar said in a past interview.

    In an Oct. 18 interview, Jaggar confirmed that Stark and the GAO had completed the new parameters of the requested study.

    In an Oct. 15 letter to the GAO, Stark asked the agency to substitute a new request for his previous request for a study on patient referrals.

    "I am concerned about the trend in nonprofit hospital conversions and the potential loss to communities of charity care and other essential healthcare services," Stark said. "My immediate concern is with the mission and control of charitable foundations that result from nonprofit conversions to for-profit and the use of the funds designated for charitable purposes."

    In his request, Stark asked the GAO to generate data on the number of foundations that have resulted from not-for-profit hospital conversions and on how those foundations operate. And, Stark said, the GAO should determine whether the foundations are fulfilling their charitable missions.

    Although many Columbia buyouts of not-for-profit hospitals have resulted in the creation of charitable foundations, the change in the study's focus gives the company a breather on Stark's self-referral questions. But it still may face a probe by HCFA and HHS.

    Columbia executives didn't return phone calls regarding their reaction to the change in the GAO's study. But a Columbia spokeswoman told the Dow Jones News Service that the company doesn't involve itself in topics to be covered by the GAO.

    "I don't discuss with the GAO what any congressman has asked it to do," Scully said. "My guess is that conversions is a little hotter issue." He said he welcomed the examination of conversions because there have been a lot of misperceptions about the sales of not-for-profit hospitals to for-profit chains. He said he hoped the GAO study would confirm that these deals are on the up-and-up.

    "Personally, I think the GAO study will help us, not hurt us," Scully said. "It's only natural for people to get a little nervous when Stark asks for something, but I don't think we have much to worry about."

    The revamped GAO study is expected to take a year to complete. Preliminary data may be available next summer.

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