The year opened on a somber note, with the nation still struggling to cope with the aftermath of the Sept. 11, 2001, attacks and subsequent anthrax scare. The healthcare industry was scrambling to be ready for any future attacks and pondering the best preparedness measures. Meanwhile, compliance and quality of care simmered on the back burner, along with soaring malpractice insurance costs and growing budget deficits in the states. And debate over provider reimbursement rates, staffing shortages and more double-digit increases in the cost of healthcare coverage also made headlines.
* HHS Secretary Tommy Thompson establishes a regulatory reform committee amid criticism that the task force is skewed toward providers without representation from beneficiaries and consumers.
* California announces numbers for its controversial nurse-staffing ratios: one nurse for every six patients.
* Michael Maves, M.D., takes the reins at the American Medical Association, vowing to fight for meaningful changes for the Chicago-based physician group.
* Carolyn Lewis, the first African-American to chair the American Hospital Association, dies at age 65.
* A new study shows the national nurse vacancy shortage is projected to continue unabated-reaching 15% by 2003.
* Blue Shield of California plans a first-ever tiered-coverage model for all 16 of its health plans, charging more for higher-priced facilities.
* Hospitals will get $125 million of the $2.9 billion bioterrorism-preparedness package President Bush signed in December.
* The Internal Revenue Service questions whether use of bond pools is a way for some hospital associations to boost their bottom lines and generate fees for underwriters and others through tax-exempt financing meant for its member hospitals.
* President Bush pledges $190 billion over 10 years to revamp Medicare, citing the plight of low-income seniors and more than 40 million uninsured.
* Seniors are paying more for healthcare, according to new studies, with the sickest seniors paying 62% more out-of-pocket costs in 2001 than in 1999 for Medicare+Choice plans.
* A federal appeals court in Atlanta overturns the convictions of former Columbia/HCA Healthcare Corp. executives Jay Jarrell and Robert Whiteside, both indicted in 1997 on criminal Medicare fraud charges.
* Enron and WorldCom scandals turn up the heat for hospital auditors, especially Chicago-based Arthur Andersen, at the center of several accounting fiascoes. Andersen would stop auditing in August.
* Under the weight of mounting lawsuits for breach of contract, NeoDyme Technologies Corp., an equipment-maintenance firm based in College Station, Texas, slashes two-thirds of its workforce.
* The specialty hospital growth spurt continues, with two heart hospitals being built in Indiana, four in the works in Louisiana and two more on their way in South Carolina. Several projects are joint ventures with physicians.
* The IRS will issue guidance for the multibillion-dollar bond industry that finances hospital system mergers.
* The U.S. Agriculture Department decides to stop sponsoring visas, as rural health advocates worry that terrorism concerns will stem the flow of foreign doctors to medically underserved areas.
* Seemingly good news for Medicare-improvement in its solvency-means bad news for reform prospects this year as urgency diminishes somewhat on Capitol Hill.
* Faced with rising healthcare costs and a shrinking balance in the state's checkbook, Wisconsin fends off further shortfalls by calling for bans on hospital construction.
* Pending legislation that would allow Alaska to become only the third state-joining New Jersey and Texas-to allow doctors to bargain collectively with insurers faces Federal Trade Commission resistance.
* A bipartisan congressional group introduces a medical liability bill to cap awards for pain and suffering at $250,000.
* International patient volume at elite U.S. hospitals drops by a third since the post-Sept. 11 security measures, uniting directors at the programs to work on expedited visa clearance for international patients.
* Congress approves a $4.6 billion bioterrorism bill, allotting $520 million to states for shoring up emergency preparedness at clinics, hospitals and other facilities. An additional $1.1 billion for education and training are to be split among the states, with each getting at least $5 million.
* Hospital groups lose a lawsuit to block reduction of Medicaid's "upper payment limit" to 100% of Medicare rates, from 150%.
* A sexual abuse scandal battering the Roman Catholic Church touches the healthcare community, as six hospital chaplains are suspended amid accusations of child sexual abuse.
* Hospital mergers and acquisitions continue a sluggish pace last year down from its height in 1997, according to Irving Levin Associates, New Canaan, Conn.
* State attorneys general start applying charitable trust laws to not-for-profit hospital deals. Banner Health System, Phoenix, fights back in court, filing complaints in New Mexico and South Dakota, and later in the year in North Dakota.
* A lawsuit by local hospitals in Birmingham, Ala., questions an exemption that allows rehabilitation giant HealthSouth Corp. to bypass Alabama's certificate-of-need law.
* Elias Zerhouni, M.D., is named the National Institutes of Health's first permanent director since 1999.
* The federal government investigates HMO practices involving drugmakers, issuing subpoenas to PacifiCare Health Systems and WellPoint Health Networks.
* Group purchasing organizations draft best practices guidelines to ward off complaints about anticompetitive behavior and other abuses in the industry.
* The AMA votes to transform itself into an umbrella group that oversees state medical organizations and specialty societies, passing on to them the burden of collecting dues and asserting influence on lawmakers. In the black for operations income last year, the 155-year-old group continues to bleed membership.
* A group of Canadian researchers says mortality rates are higher at investor-owned hospitals, which they contend skimp on care and hire fewer skilled workers per bed-findings that draw complaints of political bias.
* HHS pledges federal grants of more than $30 million for nursing shortage relief. Meanwhile, a new study by the New England Journal of Medicine bolsters the theory that more registered nurses on staff lead to better clinical outcomes.
* The Senate introduces patient-safety legislation that encourages voluntary medical-error reporting by making the process nonpunitive.
* Threatened with a class-action lawsuit and other pressures, a group overseeing medical residents promises to adopt work schedule limits.
* The U.S. Justice Department closes the book on a decade-long criminal investigation of Columbia/HCA.
* Richard Carmona, M.D., is confirmed as U.S. surgeon general, assuming a post that's been vacant since mid-February when David Satcher, M.D., left to become the director of the National Center for Primary Care at Morehouse School of Medicine, Atlanta.
* The only Level I trauma center in Nevada reopens after closing its doors for more than a week because of liability issues plaguing the industry.
* HCA, Nashville, and Promina Health System, Atlanta, are the first of their peers to join the Washington-based Leapfrog Group.
* Marsha Johnson Evans is chosen to lead the scandal-ridden American Red Cross. Blood banks reached historically low levels this summer, after much of the record post-Sept. 11 donations went unused, blamed in part for donations falling off.
* Arizona is accused of dipping into Medicaid funds meant for safety-net hospitals as the state's coffers go bare. With many state budget shortfalls reaching crisis levels, the U.S. Senate approves a temporary relief measure for Medicaid matching funds.
* A survey by a rural health policy group shows almost 40% of rural hospitals lack funding for basic repairs needed for complying with state and federal regulations.
* President Bush signs the Nurse Reinvestment Act, which provides grants and scholarships in recruitment and retention efforts.
* Medical equipment maintenance firm Neodyme Technologies Corp. files for bankruptcy, listing some 8,000 creditors in its multimillion-dollar filing.
* The Medicare program needs more funding, better technology and less congressional meddling, according to an 80-page report by industry experts.
* Safety nets in the industry feel the strain of increasing demands. The U.S. Department of Veterans Affairs makes the unpopular decision to rein in enrollee numbers, while a teaching hospital in Orange County, Calif., says it'll treat fewer indigent patients.
* HHS finalizes privacy rules under the Health Insurance Portability and Accountability Act of 1996.
* Wisconsin hospitals that said the marketplace-not the government-should determine hospital construction win out in the Legislature.
* The Catholic Health Association says a high priority for its members will be to make a dent in the uninsured population, with a goal of cutting the number by 15% in the next three years.
* The Senate fails to pass a prescription drug benefit for seniors when a compromise falls through.
* The American Medical Group Association's annual report shows poor financial performance for medical groups, especially those in capitated markets.
* Lawmakers plan a $37 billion federal Homeland Security Department to oversee bioterrorism preparedness and other national security issues.
* Sherif Abdelhak pleads no contest to a single misdemeanor charge of plundering charitable assets to inflate the books at Pittsburgh-based Allegheny Health, Education and Research Foundation, which filed for bankruptcy in 1998, owing creditors more than $1 billion.
* A controversial study by Blue Cross and Blue Shield of Minnesota blames a construction boom for rising healthcare costs.
* The U.S. Census Bureau reports the ranks among the nation's uninsured rose to 41.2 million in 2001.
* HealthSouth lowers its earnings forecast for 2003 and approves a spinoff of the company's most lucrative business-outpatient surgery centers-only to scrap it later in the year. Earlier, Chairman Richard Scrushy resigned his post as chief executive officer amid lawsuits alleging insider trading.
* C. Thomas Smith announces he'll retire as VHA president and CEO after 11 years with the community-based cooperative.
* HHS unveils a Medicare+Choice pilot program that mimics PPO plans.
* The Center for Studying Health System Change cites a 10% rise in hospital expenses last year, a finding providers hope will boost their case for more Medicare funding.
* The Blues Cross and Blue Shield Association issues a 400-page study homing in on hospital consolidation and expensive medical technology as the key drivers of healthcare costs.
* HCA wins prized bid to enter the Missouri marketplace with a $1.1 billion takeover of not-for-profit Health Midwest.
* Sen. Paul Wellstone (D-Minn.), a vocal advocate for the uninsured and mentally ill, dies in a plane crash at age 58.
* A study by consumer groups says the rise in medical malpractice insurance costs is tied more closely to volatile investment income than to multimillion-dollar jury awards.
* A Medicare commission report says Medicare reimbursement rates vary widely by hospital, with for-profits and teaching centers leading the pack.
* A national poll finds quality ratings assigned to doctors, health plans and hospitals don't influence patient choices, with only 1% polled saying they'd switch providers based on such rankings.
* A Food and Drug Administration advisory panel recommends approving drug-eluting stents, which hospitals fear will dig into their highly profitable bypass surgery business.
* The collapse of National Century Financial Enterprises in sets off an avalanche of bankruptcies of hospitals and other healthcare organizations that sold their outstanding bills to NCFE for upfront cash.
* Two years after its widely cited To Err is Human: Building a Safer Health System report, the Institute of Medicine releases its third paper on healthcare quality, calling for a government lead in standardizing performance assessment efforts and in offering financial incentives for quality improvements.
* Tenet Healthcare Corp. unleashes a management overhaul in the wake of controversy over an aggressive strategy to court high-acuity, high-margin outlier cases. The Santa Barbara, Calif.-based company also reveals the HHS' inspector general's office is conducting an audit of the company's Medicare outlier payments.
* In midterm elections, the GOP recaptures control of the Senate and increases its edge in the House. Meanwhile, Oregon voters reject a ballot initiative for universal healthcare coverage in the state.
* The California Healthcare Association requests a timeout for implementing nurse-staffing ratios until 2006.
* CMS Administrator Thomas Scully, speaking at a Blues association briefing, says hospital costs are rising because of higher labor costs, less competition and the weakened effect of managed care.
* Doctors are taking on less charity care as they tackle lower reimbursements and longer hours, according to a study by the Center for Studying Health System Change, Washington.
* President Bush announces a voluntary program to distribute the smallpox vaccine that is expected to begin in January.
* HCA announced it reached a tentative agreement with the U.S. Justice Department to pay nearly $898 million to settle civil whistleblower lawsuits, concluding the largest, costliest and longest-running healthcare fraud investigation in U.S. history.