Executives of a Massachusetts hospital system trekked to Nashville last week for a face-to-face meeting with Thomas Frist Jr., M.D., to get assurances from the new Columbia/HCA Healthcare Corp. chairman and chief executive officer that they won't be left in the lurch by upheaval at the hospital chain.
In the Sept. 2 meeting with eight leaders of Neponset Valley Health System, Frist said the $58 million purchase of the system was on despite Columbia's announced pullback from its aggressive acquisition strategy, said Neponset President Yolanda Landrau.
In the face of an ongoing federal fraud investigation of the company and its executives, Columbia has scrapped a number of its planned hospital acquisitions as well as trimmed back on its own internal acquisitions staff (Sept. 1, p. 3).
At least six of the company's roughly 15-person acquisitions staff have been moved out of that department, a Columbia spokesman confirmed. Some are leaving the company, while others are being absorbed by other departments, she said. Sheldon Lutz, vice president for development, will learn by the end of September if another position in the company will be offered to him. His job is being eliminated, the company said.
As of late last month, Neponset Valley was still on Columbia's shrinking list of pending deals, but the local hospital executives wanted to make sure it stayed there.
Landrau said the contingent of eight board members also came away "assured there would be a meaningful network in Massachusetts," where Columbia's moves to date have been stiffly opposed even before the latest disclosures about the company.
Landrau also was told that further network-building in the state would come by way of partnerships and contractual arrangements rather than outright acquisitions.
Neponset, which includes Norwood (Mass.) Hospital and Southwood Community Hospital in Norfolk, Mass., expects a loss of nearly $1 million in the fiscal year ending Sept. 30 and has projected an operating loss of between $5 million and $12 million next year. Revenues are expected to decline to $91 million next year from $129 million in fiscal 1996, when it finished $1.2 million in the black.
But its attempt to get out from under financial problems-$50 million of the purchase price is earmarked for debt repayment-has met with community skepticism about Columbia's aggressive reputation.
The deal faces other obstacles, including protests that the purchase price is too low. Attorney General Scott Harshbarger has hired the accounting firm of Price Waterhouse to do an independent appraisal before he makes a final recommendation to the state probate court on transfer of charitable assets. Neponset is hoping for final clearance by mid-October.
In other developments, Columbia's Northwest Medical Center in Montgomery, Ala., agreed last week to pay the Alabama Medicaid program about $65,000 for improperly billing the program for 109 tubal ligations. The program doesn't cover those services. Under the settlement, Columbia admitted no wrongdoing.
Separately, participants to the Elliott Waldman Pension Trust, Melville, New York, filed a class-action suit in U.S. District Court in New York against Melville, N.Y.-based Olsten Corp. and its executives for allegedly artificially inflating the company stock price and submitting inflated Medicare cost reports.
Olsten Health Services manages several of Columbia's home-health agencies, which are targeted in the fraud investigation.
The July raid by FBI agents on Columbia sites across the country included a search at Olsten's office in Atlanta (July 21, p. 3).