Well, that was interesting. The grand experiment that was Col-umbia/HCA Healthcare Corp. came to a symbolic end earlier this month when the U.S. Department of Justice announced that it was dropping its 9-year-old criminal fraud investigation of the nation's largest for-profit hospital chain and the Nashville company's executives. Despite extracting $840 million in criminal and civil fines from the company in 2000, no top corporate executives were ever charged in the case. And the two lower-level HCA executives who were convicted of criminal fraud in an isolated case involving just one hospital had their convictions overturned by a federal appeals court. That appeals court recently denied a rehearing request by the Justice Department, which has decided not to pursue the case further.
Despite the fact that the case didn't end with former high-ranking Columbia/HCA corporate executives being hauled off to jail, as many not-for-profit healthcare executives had secretly hoped, the company and how its former executives did business changed the healthcare industry forever.
What Columbia/HCA did was bring hardball business tactics to a historically staid and overly collegial healthcare industry. What many people thought was illegal actually was fairly common in other industries. It's just that no one really tried it in healthcare to the extent that Columbia/HCA did. Like President Bush's position on terrorism, you're either with us or against us; Columbia/HCA's position was either do business with us or we'll crush you. Its philosophy internally was similar. Make your numbers or we'll fire you. All the while, the company was busy building a public relations veneer of caring. Rarely a week would go by without an announcement about Columbia/HCA employees helping build homes for the poor, the company opening wellness kiosks in shopping malls or donating money to some healthcare cause.
And frankly, Modern Healthcare often bought into the Columbia/HCA mystique, treating many of the public relations stunts (such as the Columbia/HCA credit card that turned over a certain percentage of charges to charity care) like actual news. And when stories critical of the company's tactics were suggested, an often-heard phrase was: "Better not. We don't want them to stop talking to us." We bought into the "do business with us or we'll crush you" threat. But a few stories did squeak through the fear. Like the one about the company falsely suggesting that it won the Malcolm Baldrige National Quality Award and being reprimanded by the Department of Commerce. Or the one that shot holes in Columbia/HCA's policy position that the payment of taxes was the moral equivalent of providing community benefits to the poor. The experience helped shape my philosophy on how to cover the healthcare industry and who to hire to cover it.
But the Columbia/HCA experiment had consequences more far-reaching for the industry than our newsroom and far more important for our readers and how they do business. Among them:
* Almost every hospital in the country became subject to some type of fraud investigation as state and federal regulators hunted down the "next" Columbia/HCA, looking into everything from how hospitals billed Medicare for laboratory services to how physicians billed for the work of medical residents.
* The nation's second-largest for-profit chain, Tenet Healthcare Corp., Santa Barbara, Calif., built its empire by promoting itself to prospective hospital acquisitions as the kinder, gentler chain as an alternative to Columbia/HCA, vowing to preserve a targeted hospital's culture and mission.
* Dozens of states passed not-for-profit hospital sales laws to make sure that for-profit chains were paying fair prices for previously charitable assets. Many of those laws have been extended to not-for-profit buyers and other types of healthcare companies such as insurers.
* The mere threat of Columbia/HCA coming to town forced historic not-for-profit competitors to do the unthinkable: Merge! Now, the nationwide hospital consolidation movement of the 1990s, sparked by Columbia/HCA, is being blamed, in part, for rising healthcare costs.
* With fewer hospitals as members because of the consolidation movement, many national and state hospital associations had to diversify into for-profit businesses to replace lost dues revenue.
* Two new hospital chains were born-Triad Hospitals, Dallas, and LifePoint Hospitals, Brentwood, Tenn.-as Columbia/HCA restructured in the face of the massive fraud investigation.
* And Thomas Frist Jr. was reborn as HCA's savior as he came back to exorcise the Columbia business culture out of Columbia/HCA.
The question is this: Is the healthcare industry better or worse because of the Columbia/HCA experiment?