Oregon's only physician-owned hospital is once again at imminent risk of losing its government funding after failing to correct certain problems discovered during a regulatory inspection earlier this year.
The CMS this month notified Physicians' Hospital, Portland, that it will be stripped of its Medicare and Medicaid certification May 26 unless the hospital corrects remaining deficiencies. The 39-bed hospital has been under scrutiny since last summer, when a patient died of cardiac arrest while no doctor was available to respond.
At a Senate Finance Committee hearing last week, CMS Administrator Mark McClellan said that the CMS is in the process of booting the hospital from the Medicare program, and in addition will try to recoup roughly $500,000 in Medicare payments paid to the hospital.
"Upon a revisit, it became apparent that the facility still does not meet all the requirements for participation in the program," a spokesman for the CMS' regional office in Seattle said. The hospital can file an appeal, he said, "But that doesn't stop the termination track."
Physicians' may have to refund about $500,000 in federal payments if it is found to have violated an 18-month congressional moratorium that barred new physician-owned specialty hospitals from billing Medicare for services through last June. Physicians' contends it is not a specialty hospital, but at least two prominent senators say it is.
The hospital has stopped admitting patients for inpatient surgery while it works to come into compliance and completes its planned sale to a real estate investment firm, Physicians' spokeswoman Dianne Danowski-Smith said. A potential buyer, Regency Hospital Co., had signed a letter of intent to acquire Physicians' and convert it into a long-term acute-care hospital, but withdrew the offer this month.
Physicians' current owners acquired bankrupt Woodland Park Hospital in May 2004 and reopened the facility as a general acute-care hospital that December. Physicians' became certified under Medicare in January 2005.
Regulators began investigating the hospital in August 2005 after an 88-year-old patient died while recovering from elective back surgery. According to state officials, no doctors were on-site when the patient went into cardiac arrest, and nurses were forced to call 911 to have her transported to another hospital.
The situation caught the attention of Sens. Chuck Grassley (R-Iowa) and Max Baucus (D-Mont.), who called for a federal investigation into the CMS' oversight of physician-owned specialty hospitals (Feb. 20, p. 7).