COLUMBIA/HCA: Launches New Ethics Program
Columbia/HCA Healthcare Corp. launched its new company-wide ethics, compliance and corporate responsibility program yesterday as 200 of the company's newly appointed "ethics and compliance officers" (ECOs) gathered at the company's headquarters in Nashville. The two-day training seminars were designed to introduce the ECOs to a program that they will be expected to implement locally, the company's new code of conduct and the overall ethics and compliance program (release, 2/12). "There is nothing wrong with making money in health care. But you have to balance that against the temptation to push the envelope," Latham & Watkins attorney Michael Chertoff -- the lawyer leading Columbia's criminal defense against fraud charges -- told the 200 senior leaders gathered at the meeting. The Wall Street Journal reports that the "program is part of a broader effort" by Columbia Chair Dr. Thomas Frist "to overhaul the company's culture and thus persuade federal regulators that the hospital giant is serious about reform." Frist has also mentioned that "he hopes soon to be in a position to start talks with federal regulators and prosecutors toward a settlement."
Do's And Don'ts (And Losses)
The Journal reports that while Columbia's "managers spent yesterday learning the do's and don'ts of the company's new ethics program," the company is expected today "to report a fourth-quarter loss of $1.25 billion to $1.35 billion" (Lagnado, 2/13). True to predictions, Columbia announced fourth-quarter net losses of $1.293 billion or $2.01 per share. The losses were due to "discontinued operations and restructuring and asset impairment charges." Columbia recorded after-tax charges during the fourth quarter of $732 million related to closed or divested assets. And $55 million in after-tax charges are related to ongoing government investigations and severance costs. The company also saw roughly a 9%, or $440 million, decline in revenues from last year. Columbia COO Jack Bovender said, "While we realize that 1998 will continue to present challenges, we expect the company to experience significant benefits from the internal reorganization and restructuring plan" started this year (Columbia release, 2/13).
List of No-Nos
At the ethics summit, Chertoff warned executives about "a series of 'hot' areas from physician relationships to Medicare coding and the preparation of cost reports" that they should be especially cautious about. "'There is a tremendous temptation to shift' costs on Medicare cost reports. ... 'But that is a real no-no,'" he said (Journal, 2/13). Yesterday's session is the first of four that will be held throughout February and will include more than 500 local hospital leaders who are ECOs and CEOs. "Instituting a values-based culture throughout this company is something our employees have told us is critical to forming our future," said Frist (release, 2/12). However, CEO of Columbia's Chicago-based Michael Reese Hospital Scott Winslow said, "I think the (hospital) CEOs are feeling good about the discussions, but question whether the company can make the culture change" (Journal, 2/13).
No Fraud Found Here
Separately, the Baltimore Sun reports that a "fraud and conspiracy" charge against Columbia's medical technology company Universal Health Watch Inc. "has been dismissed." U.S. Bankruptcy Judge James Schneider dismissed the allegations brought against the company and two Novatek International Inc. officers by Britain-based Wood Gundy, ruling that the plaintiff "had not shown specifically what role, if any, [the defendants] had played in the alleged fraud scheme." Brown, Goldstein & Levy attorney Andrew Levy called the ruling "a clear vindication for Universal" (Guidera, 2/13).