The mushrooming legal problems of Columbia/HCA Healthcare Corp. last week derailed one the chain's most controversial acquisitions-the proposed purchase and conversion of 152-bed Roger Williams Medical Center in Providence, R.I.
Negotiations in a second deal also were scuttled in California, and a physician executive education program fell through with a university in Tennessee (See story, p. 6).
Meanwhile, more corporate executives of the Nashville-based company resigned, more employees were subpoenaed to appear before a federal grand jury investigating the company and more private litigation was filed against Columbia. All come in the wake of growing federal and state fraud investigations of the nation's largest for-profit hospital company.
In Rhode Island, Columbia's bid for not-for-profit Roger Williams is all but dead. Last week, the hospital said Columbia freed it from restrictions on negotiating with other partners.
Columbia had signed an agreement to acquire the hospital in June 1996, but the deal had been held up by local opposition. Roger Williams would have become Rhode Island's first for-profit hospital.
The transaction prompted the state to pass one of the toughest not-for-profit hospital sales laws. The law-vetoed by Gov. Lincoln Almond but overridden by the state Legislature-makes for-profit companies wait three years before purchasing a second not-for-profit hospital in the state. Rhode Island has 11 acute-care hospitals; all are not-for-profit.
Roger Williams' Chief Executive Officer Robert Urciuoli said, "We will respond to approaches that have been made to us in recent weeks, and we will reach out proactively to other potential partners."
He declined to say when another partnership would be announced or which organizations might be the partner. Roger Williams' sales contract with Columbia expires Sept. 30.
In California, Columbia withdrew as a contender for a contract to manage the University of California's 383-bed Irvine Medical Center in Orange.
"With all its recent activities, Columbia has decided to focus its attention on other pressing issues within the organization," said Mark Laret, executive director of the hospital.
Santa Barbara, Calif.-based Tenet Healthcare Corp. remains in the running for a contract, Laret said.
And while trying to move quickly to sell its home-care division, Columbia stumbled when it offered the business to Murfreesboro, Tenn.-based National HealthCare. The chain pulled back the offer when it learned NHC wanted to buy only parts of the division.
Earlier this month, Columbia told NHC it could have first shot at the home-care business, NHC spokeswoman Liz Massa said.
While NHC was interested, it only wanted to purchase segments of the division that were centrally located to its existing 110 nursing homes, 33 home-care programs and 13 assisted-living centers in the Southeast. Columbia renounced its offer because it didn't want to sell portions of the division, Massa said.
Columbia's home-care division, which is one target in the fraud investigations, has 570 locations in 36 states. Roughly one-half of those are located in Florida, Georgia, Tennessee and Texas.
Columbia Senior Vice President Victor Campbell said he would not confirm or deny talks with any suitors for any of Columbia's businesses.
Meanwhile, three more Columbia employees submitted resignations last week. Most recently, Eve Hutcherson, Columbia's director of corporate communications, stepped down Aug. 22, bringing to nine the number of corporate executives that have departed in recent weeks or announced plans to leave. Campbell said the staff will be reorganized and changes announced soon.
Earlier in the week, two other top Columbia executives announced their resignations. Samuel Greco, senior vice president for financial operations, said he will leave Columbia later this month. General Counsel Stephen Braun has not released an effective date of his departure.
And, after leaving Columbia for a long-term-care company, Richard Bracken rejoined the chain as head of its Western group, which covers most states west of the Mississippi River. Bracken replaces Jamie Hopping, who resigned earlier this month (Aug. 18, p. 3).
Previously Bracken headed Columbia's California division; but he moved to Covenant Care Corp., San Juan Capistrano, Calif., when the division was split in July.
Meanwhile, the three mid-level executives indicted so far in the government's investigation pleaded innocent to fraud charges last week in U.S. District Court in Fort Myers, Fla.
The three are Jay A. Jarrell, CEO of Columbia's southwest Florida division; Michael T. Neeb, chief financial officer of Columbia's north Florida division; and Robert Whiteside, director of reimbursement at Columbia's Nashville headquarters.
A federal grand jury previously indicted the trio on a variety of charges related to the operation of Columbia's 249-bed Fawcett Memorial Hospital in Port Charlotte, Fla. The allegations include knowlingly filing false Medicare cost reports and inflating capital-related costs owed to the hospital by Medicare. The alleged scheme netted the hospital about $1.8 million in Medicare overpayments.
A preliminary hearing has been set for Sept. 4.
In addition, a Columbia spokesman confirmed last week that five Columbia executives have been ordered to appear on Sept. 17 before a federal grand jury in Fort Myers, Fla., as part of the probe into the company.
State Medicaid investigations of Columbia increased last week as well. Six states joined Alabama, Florida and Texas in launching probes of the company's Medicaid billing. The newcomers are California, Georgia, Louisiana, Massachusetts, Nevada and Virginia.
And, in U.S. District Court in Nashville, two more public pension funds filed suits against Columbia. Lawsuits filed by the $68 billion Florida State Board of Administration and the $8 billion Louisiana Teachers Retirement System follow the first public pension plan suit, which was filed by New York State Comptroller H. Carl McCall on behalf of the state's $90 billion fund. The suits charge Columbia and its executives with engaging in activities that put the company's stock at risk.