Detroit Medical Center, which is being acquired by Vanguard Health Systems, agreed to pay $30 million to settle allegations involving improper financial relationships with referring physicians. The settlement, which also was signed by Vanguard, came one day before the scheduled Dec. 31 close of Vanguard’s proposed $1.3 billion acquisition of the six-hospital, not-for-profit DMC. Vanguard is a for-profit hospital chain based in Nashville. According to the U.S. Justice Department, problematic financial relationships were uncovered by DMC itself during its due diligence procedures as it prepared to be sold to Vanguard, and DMC reported its findings to the government. Under the settlement, DMC admits to no wrongdoing. The Justice Department alleged that DMC entered into a number of deals with physicians—including favorable office leases and advertising terms, and business courtesies such as tickets to sporting events—that may have violated the anti-kickback statute and restrictions on physician self-referral known as the Stark law. Joel Lee, vice president for marketing and communications at Vanguard, said DMC kept Vanguard informed of the negotiations with the Justice Department. Until the size of the settlement was known, the matter had jeopardized the deal, he said. “It was a hidden liability.” Lee said DMC will pay the $30 million settlement, not Vanguard.
Late News: Detroit Medical Center to pay $30 million settlement
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