Federal Officials Investigate Two Doctors at Tenet Healthcare Hospital in Redding for ‘Unnecessary Surgeries’
Officials from Santa Barbara-based Tenet Healthcare, one of the largest for-profit hospital chains in the nation, yesterday announced that federal officials raided one of their hospitals in California seeking information for an investigation of two physicians who may have performed "unnecessary surgeries" and potentially defrauded Medicare, the New York Times reports (Abelson, New York Times, 11/1). About 40 federal agents searched Redding Medical Center and the offices of the cardiologist and cardiothoracic specialist under investigation (Enkoji, Sacramento Bee, 11/1). The probe involves investigators from the FBI, the U.S. Attorney's office for the Eastern District of California and the HHS Office of Inspector General. According to an FBI affidavit, government officials suspect that the physicians participated in a "scheme to cause patients to undergo unnecessary invasive coronary procedures," including artery bypass and heart valve replacement surgeries (New York Times, 11/1). Neither physician has been charged with a crime, and Tenet is not under investigation, Laura Schwartz, a prosecutor in the U.S. attorney's office who is handling the case, said, according to the Los Angeles Times (Lee/White, Los Angeles Times, 11/1).
The New York Times reports that news of the raid "raised concerns" over Tenet and its oversight of its hospitals. One analyst suggests that the investigation could indicate systemic problems stemming from Tenet's emphasis on increasing volume in lucrative specialties (New York Times, 11/1). The affidavit states that a medical professional who expressed concerns about the two physicians believes medical center executives were aware of the problem but "look[ed] the other way" because the specialists "produce tremendous revenue for the hospital" (Los Angeles Times, 11/1). The surgeons were the top two billers of the Medicare program in their specialties in the Northern California region, the Wall Street Journal reports (Rundle, Wall Street Journal, 11/1). "This whole incident does call investors' attention to the question of the integrity of management," Rita Freedman, an analyst with PNC Advisors, said (New York Times, 11/1).
News of the investigation marked yet another "setback" for Tenet, whose stock has been falling since Monday after an analyst questioned the company's Medicare reimbursements (Los Angeles Times, 11/1). Earlier this week an analyst for UBS Warburg downgraded Tenet's stock because of concerns about the company's Medicare outlier payments, which compensate for unusual cases that require very costly care. Tenet's outlier reimbursements as a percentage of total Medicare payments are "significantly higher" than other hospitals' (Wall Street Journal, 11/1). According to the Los Angeles Times, yesterday's announcement created a "full-blown crisis of confidence" among the chain's investors, causing the company's stock to fall 26%, or $10.22, to $28.75. Tenet's stock had fallen approximately 20% over the previous three days. Yesterday, Tenet sought to distance itself from the investigation. "This is an investigation of doctors, not the hospital or Tenet," company spokesperson Harry Anderson said (Los Angeles Times, 11/1).This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.