The report of an internal investigative committee at 510-bed Fletcher Allen Health Care, Burlington, Vt., denounces top hospital managers for their handling of a $173 million-plus expansion project and for withholding information from state regulators to avoid a certificate-of-need review. Fletcher Allen released the 72-page report on its Web site; its board formed the committee in July to investigate allegations of regulatory noncompliance. Management "lacked the candor and forthrightness that should guide (the hospital's) conduct in dealing with the public, the government and its own board of trustees," the report said. The hospital board, meanwhile, failed to insist on regular, detailed reports on the project, exacerbating the "problems instigated by management's misguided regulatory practices," Fletcher Allen Chaiman Philip Drumheller said. "The trustees bear ultimate responsibility for the actions of Fletcher Allen."
The executives who had primary responsibility for the $173.4 million Renaissance Project and regulatory compliance -- Thad Krupka, Fletcher Allen COO, and David Demers, the hospital's senior vice president of planning and business development -- have agreed to step down, interim CEO Ed Colodny said. Colodny was named to the position in early October after the resignation of then-CEO William Boettcher, who had been placed on administrative leave in the midst of the scandal. In conjunction with the Renaissance Project, Fletcher Allen began construction on a $55 million underground parking garage without a CON, arguing that a CON was unnecessary because a third party was building and financing the garage. The hospital eventually sought and was granted a CON after a long dispute with the state. Meanwhile, the state ordered a halt to a $9 million software upgrade for lack of CON approval. At a news conference Wednesday, Drumheller apologized to employees and the community, saying, "This happened on our watch, and we accept responsibility." Read the committee's full report at www.fahc.org. -- by Julie Piotrowski
La. hospital district opts to stick with Tenet
The St. Tammany Parish Hospital Service District No. 2 board, which oversees 173-bed Slidell (La.) Memorial Hospital, has confirmed its intent to enter into a 50-year lease with Tenet Healthcare Corp., Santa Barbara, Calif. Tenet agreed to pay $130 million upfront to lease the hospital and to invest $40 million in the hospital over five years. At a meeting this week, Tenet officials persuaded the board that a recent spate of troubling headlines aren't signs of real problems at the company that would affect Slidell, board Chairman Albert Hamauei said. Tenet has been reeling from a series of revelations, including allegations that the company "gamed" the Medicare system to boost outlier payments, a federal audit of those payments, a Federal Trade Commission review of Tenet's consolidation of two Missouri hospitals and an FBI investigation of two physicians practicing at Tenet's Redding (Calif.) Medical Center. The physicians have not been charged, and authorities have said Tenet is not a target of the investigation. The Redding allegations were particularly worrisome because they involve quality of care, Hamauei said, but Tenet "assured us that they were not involved with that in any way, shape or form, and couldn't have monitored it." Voters in the district will get their say on the deal most likely in a referendum in either January or April 2003, Hamauei said. -- by Vince Galloro