, managing editor
That rumbling that hospital executives felt last week was not a seismic event. It was the aftershock of the conviction of two of their colleagues on criminal Medicare kickback charges.
When a federal court jury in Kansas City, Kan., found former Baptist Medical Center Chief Executive Officer Dan Anderson and Chief Operating Officer Dennis McClatchey guilty (April 12, p. 2), you could hear the gasps in corner offices around the country. Both men now face the prospect of time in prison, and Anderson has gone into the record books as the first hospital CEO convicted of violating the federal anti-kickback statutes.
A large part of the industry reaction stems from the shock of recognition. Many hospitals have negotiated deals with physicians or others that were designed to boost patient referrals. Most of these arrangements presumably fall within the letter of the law.
But surely Baptist is not alone. And you can bet that federal prosecutors in other jurisdictions are going to take the jury's decision as a license to scrutinize a lot of other deals.
The Kansas City case raises many questions about the anti-kickback laws and their enforcement. The statutes can be Byzantine and confusing. The government's enforcement is spotty and seemingly arbitrary at times. The defense objected to tactics that bordered on entrapment.
These are issues that will have to be resolved in the courts. In the meantime, some good may result from this sad episode if it prompts a re-examination of recent business strategies. Hospitals have responded to managed care and other changing circumstances in the industry with frantic, sometimes desperate, attempts to buy physician practices and sign referral-boosting deals with just about anybody who has ever seen a patient. The fruit of these ventures usually has been meager and costly. In Baptist's case, it has been poisonous.
Let us hope that the next time some hospital executive is tempted by a dubious referral deal, he or she will reject it in favor of adding value by more traditional and sounder means. Attract patients and payers by delivering high-quality healthcare at fair prices. It's expensive and time-consuming, but at least you won't have to spend time in prison.