Analysis: Hospital Chain Admission Rates Higher Than State Averages

Prime Healthcare Services has collected hundreds of millions of dollars by transferring a high number of Medicare beneficiaries from its emergency departments to its hospitals, according to a California Watch analysis, California Watch reports.

The investigation included an examination of state data, interviews and a review of 2,700 pages of court and public testimony.

Background

The health system has faced criticism for allegedly overbilling for the bloodstream infection sepsis and a rare form of malnutrition called kwashiorkor.

State and federal officials are investigating whether the health system is exaggerating patient conditions to earn higher Medicare payments.

Investigation Details

The most recent analysis found that from 2005 to 2009, above-average Medicare admission rates have brought in an additional $220 million in revenue for Prime Healthcare.

According to the analysis, the percentage of Medicare beneficiaries admitted to Prime Healthcare hospital beds from the ED increased from about 45% to about 63% from 2005 to 2009. Other California facilities had an average 8% decrease in such admissions. Tenet Healthcare, another large health system, admitted about 39% of its ED patients to hospitals in 2009.

Records from 2009 show that Prime Healthcare raised an additional $107 million in revenue by admitting about 8,800 more Medicare beneficiaries than would be expected based on the state average of ED-to-hospital admission rates.

Prime Healthcare Response

Michael Sarrao, vice president and general counsel for Prime Healthcare, called the analysis of admission rates "deeply flawed."

He wrote in an email that the analysis "utterly fails to consider the medical basis for admissions, and uses unexplained statistics to attempt to question the judgment of doctors as to what is best for patients."

The health system also says that it serves more critically ill patients than other hospitals (Jewett/Doig, California Watch, 7/23).