Hospital exec, wife charged
* The former executive in charge of shepherding the vast real estate assets of 165-bed City of Hope National Medical Center, Duarte, Calif., and his wife were charged with stealing more than $1 million through the alleged rigged auction of center properties. Joseph Rohn, 40, and Julia Eleanor Castlen, 39, were arrested in Los Angeles and San Diego, respectively, and charged with conspiracy, grand theft, money laundering, and withholding and concealing stolen property. The Los Angeles County district attorney also charged Rohn with two counts of fraudulently altering or falsifying corporate papers by a corporate agent. Each was being held on a $1.3 million bond. Prosecutors also seized more than
$1 million in assets from the defendants. Authorities alleged the couple took the money in late 1996 and early 1997 when Rohn, formerly the director of the cancer center's property management department, was asked by his supervisor to sell some City of Hope assets. Prosecutors charged the two swindled the cancer center through a series of transactions involving K&K Oil, a company they controlled. Their arrests on criminal charges follow the filing of a related civil lawsuit by City of Hope in June.
Kindred shares take a hit
* Shares of Kindred Healthcare, Louisville, Ky., lost as much as 60% of their value after the nursing home chain announced it was revising its 2002 earnings forecast, citing a "dramatic increase" in resident-liability costs. The company also said it is considering a sale of its 18 nursing homes in Florida and other measures to reduce its resident-liability exposure. Kindred said it will add $55 million in reserves for resident care lawsuits over and above its normal provision for the third quarter, an adjustment relating to claims incurred in 2001 and 2002. About two-thirds of the claims come from Kindred's skilled-nursing operations in Florida. Kindred said it has contacted its primary landlord, Ventas, Louisville, to discuss the "strategic alternatives regarding its Florida operations." Kindred leases 15 of the 18 nursing homes it operates in Florida from Ventas.
MedPAC report: Margins vary
* Medicare margins vary widely by institution, with investor-owned hospitals making fatter profits on Medicare inpatient services than not-for-profit and government hospitals, the Medicare Payment Advisory Commission said in a report presented at a meeting in Washington. Major teaching hospitals, which receive indirect medical-education payments to offset teaching costs, had an aggregate Medicare inpatient margin of 23.3% in 1999, compared with a 6.5% margin at nonteaching facilities. Hospitals that receive disproportionate share payments for treating large numbers of uninsured and underinsured patients had a 19.6% aggregate inpatient margin, compared with a 6.7% margin among hospitals that don't receive such payments. Medicare inpatient margins ranged from a low of -18.5% to a high of 20.1% without the disproportionate-share and indirect medical education payments, a finding that may "suggest the need for payment system changes," MedPAC said. Larry Goldberg, director of the national healthcare practice at Deloitte & Touche, Washington, said the findings represent "a distortion of where the costs are" and that a more thorough analysis would include both outpatient and inpatient funding.
Tenet bids for Slidell Memorial
* A $130 million offer by Tenet Healthcare Corp., Santa Barbara, Calif., was the highest of eight bids for 173-bed Slidell (La.) Memorial Hospital and Medical Center, a consultant to the public hospital said. If Tenet's bid is approved, the 114-hospital chain would own both acute-care hospitals in Slidell, located about 40 miles north of New Orleans. Tenet already owns 147-bed Northshore Regional Medical Center. Slidell's board has asked Tenet to make a presentation this week, when it will decide whether to enter exclusive negotiations with Tenet.
High court refuses review
* The U.S. Supreme Court declined to review the fraud conviction of C. David Morrison, the former administrator of 132-bed Logan (W.Va.) General Hospital. Morrison was sentenced in April 2001 to eight years and one month in prison for his conviction on 23 counts of embezzlement, tax fraud, money laundering, conspiracy and other crimes. Morrison diverted hospital funds to the development of a shopping mall and to other schemes that ultimately led to the hospital's owner, Logan Medical Foundation, filing for bankruptcy protection in U.S. Bankruptcy Court, Charleston, W.Va., in October 1998 (See story, p. 20).
Quality indicators lack impact
* Ratings that purport to measure the quality of physicians, hospitals and health plans have almost no impact on the choices consumers make, a national poll found. At a time when these measures are being touted as a way to help consumers make informed choices, only about 1% of all adults who responded to a Harris Interactive poll in June say they made use of these rankings to switch health plans or providers. The telephone survey of a nationwide sample of 1,013 adults showed that these quality rankings have had "virtually no impact on consumer choice." The survey found that about 26% of respondents reported seeing information in 2002 that rated hospitals, an increase of 4% from the previous year. Based on a review of many surveys, officials at Harris concluded that consumers are more likely to choose providers based coverage, benefits and such factors as "location, word-of-mouth, good and bad experiences, reputation and cost (for health plans)."
Cancer center wins grant
* The University of Louisville (Ky.) said it won a $1.3 million federal research grant that could help propel its James Graham Brown Cancer Center into the ranks of elite, nationally recognized research facilities. The five-year grant is the first step toward earning the National Cancer Institute's coveted designation as a comprehensive cancer center, which would enable the center to draw more research funding. The NCI has awarded the designation to only 39 cancer centers--none in Kentucky, which has the nation's highest rate of lung cancer deaths, the fourth-highest rate of cancer deaths among men and the eighth-highest among women.