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Tenet Healthcare
Price Gouging

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This web page describes the way Tenet raised prices many times what it actually cost to provide care and often more than double the prices charged by competitors. An activist eventually rallied the uninsured and often unemployed Latinos who were charged inflated prices and then pursued aggressively for payment by Tenet. They fought back eventually gouging Tenet's reputation and its credibility.

The nursing unions initiated a series of studies looking at available pricing information. They published the results and presented at several inquiries into Tenet's practices shredding the company's credibility and savaging share prices further. The extent of the price gouging and its impact on citizens is illustrated by a number of extracts from press reports.

The nurses found that Tenet targeted orthopaedic surgery, particularly spinal surgery, most of which was covered by workman's compensation which paid 50% more than competitors. These areas and workmen's compensation had been a target of Tenet's complex care strategy and its price gouging. Monitoring processes at workers compensation were absent and it was impossible to tell the extent to which fraud, outlier payments or needless surgery had occurred. The figures needed to assess this were not available. Tenet strongly denied these assertions.

Tenet's conduct is a prime example of the failure of market forces to either contain costs or to maintain quality. In fact the company thrived by compromising both. It was the community and the nurses, not the market, who addressed the problem



Price Gouging the Uninsured
Price Increases in Tenet Hospitals
Class Actions
Other Investigations
Workman's Compensation and Orthopaedic procedures
Tenet Changes Billing Structure


Community groups concerned at the consequences of not for profit takeovers, nurses worried about their patients, and groups helping the uninsured have all been acutely aware of the problems in Tenet. These groups were not part of the establishment. They had little credibility and so no obvious impact on the share market or public perceptions. One would reasonably expect analysts, and regulators dealing with a sector so mired in controversy and fraud to be looking for red flags and to respond rapidly. Once again they failed.

We should understand that Tenet are all part of an establishment wedded to market ideology. This establishment can be expected to use labeling strategies to discount information which is challenging. In almost every instance it has required enormous effort by whistleblowers and community groups to expose aberrant practices. It usually requires something to trigger it. In this instance it was the revelation that Tenet's profits were manufactured by manipulating the system and operating on people who did not need surgery.

The uninsured were among the first to suffer from Tenet's high prices. They banded together to respond. America's Medicare system only pays for the elderly and vast numbers of citizens must pay for care themselves. Large medical bills are one of the major causes of bankruptcy.

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Price Gouging the Uninsured

A Hispanic group, Consejo de Latinos Unidos initiated and organised by K.B. Forbes took up the plight of the uninsured, particularly the poor often unemployed Latino's who were the most disadvantaged. Forbes went to the courts to find out who Tenet were suing for payment, contacted them and organised the protests.

Tenet had ramped up its prices for the uninsured who were asked to pay many times the charges which HMO's paid for those wealthy citizens they insured. It then pursued these poor patients for payment very aggressively. It placed bonds on their houses and then ruined them (so much for empathy and social conscience).

Probably the main benefit of this to Tenet and the reason for the exercise was the state Medicaid system's DHS payments. These compensated hospitals for the care they provided to these citizens. The payments used a formula based on the hospitals charges s the higher they were the more Tenet were paid. These ramped up charges also formed the base line on which outlier payments were calculated. Aggressively chasing the innocent uninsured for payment of these inflated charges was simply more icing on the cake.

Forbes made every effort to publicise the issue and expose Tenet's practices. He assisted the Latino's to mount a series of court actions alleging price gouging against Tenet. He encouraged the Latino groups to band together and act in the community to block Tenet's purchases and Mergers with not for profit groups.

This all backfired badly for Tenet when the other problems in Tenet emerged in October 2002. Forbes was able to ride on the back of the very public anger. Tenet's lack of morality was glaringly exposed. It soon settled all the actions. It very publicly announced a new policy including an undertaking to charge disadvantaged underinsured patients the HMO rates. It promised not to threaten patients' homes in pursuing payments. Its credibility had been badly dented. This change in policy cut into profits and was less of a deterrent in keeping the money losing poor away. It was 18 months before Tenet introduced its new policy claiming that government regulations prohibited it from doing so.

In addition to the Latino's actions, groups of seniors have taken to the courts accusing Tenet of predatory pricing. Another lawsuit by a group of citizens claims Tenet reneged on a not for profit takeover agreement that it would charge fair prices.

The full extent of the problems and their glaringly avaricious nature are best appreciated by reading the press reports.

"We are representing the people who have no voice -- the humble working poor who have been manipulated and abused."

In California, says Forbes, Consejo brought the lawsuits against Tenet as a result of information gathered over nearly a year. Forbes says Consejo investigated the cases of 127 patients in 53 California hospitals.

According to Forbes, Tenet was billing uninsured patients as much as seven times more than those with insurance. In addition, Forbes alleges that Tenet used heavy-handed collection tactics, refusing to negotiate lower payments, despite some patients reportedly offering thousands of dollars in cash to settle their accounts.
All of the suits, says Forbes, allege that Tenet uses a two-tier billing scheme that greatly inflates medical costs for uninsured patients -- mostly Hispanics. Forbes claims the "bad debt" was then used by Tenet to secure greater reimbursements through the Medicaid Disproportionate Share Hospital (DSH) Payment Program. DSH provides state and federal funds to hospitals for taking on a greater load of indigent patients.
Forbes says Consejo's mission is about seeking justice for the uninsured. The geographic scope of the group, he adds, also is about to expand as further investigations have led Consejo to look outside of California.
He adds, "We're piloting a program and launching it next month, targeting the largest hospital systems and health care organizations that have sued (patients) over failure to pay," says Forbes about the Hospital Victims Project.
The plan in Texas, he says, is to monitor and survey filings by Tenet and other large hospital systems against its patients. "We will survey and compile the data. We will then look at individual cases that warrant it."

He adds, "Once we survey and interview these people, we will secure legal assistance. Health care companies have to prove that their charging practices are fair and equitable."
Baptist suitor in sights of litigious Calif. Group :: Tenet accused of overcharging Hispanics American City Business Journals Inc. June 7, 2002

Added May 2007
In market after market that includes the Slidell area, Forbes said, Tenet has a record of overcharging the uninsured -- primarily Hispanics and African-Americans -- four to 10 times more than what a hospital would typically accept as payment from a health- maintenance or similar organization.

Tenet hospitals also tend to play hardball with these patients when it comes to collections, frequently by demanding immediate payment in full or refusing to negotiate "realistic payment plans," he said.
Tenet accused of biased billing ; Hispanic group fights hospital takeover The Times-Picayune October 16, 2002

"They are as aggressive in collections as they are in pricing," said K.B. Forbes, Tenet Under Closer Exam :: Pricing policy may have resulted in excessive Medicaid payments, some analysts say. LA Times November 11, 2002

That scrutiny includes a lawsuit filed by Hispanic patients in Orange County (Calif.) Superior Court that alleges Tenet gouged uninsured patients and then failed to offer payment plans in a scheme to increase its disproportionate-share payments. Stormy weather :: Echoes of Columbia/HCA heard as Tenet overhauls management amid scrutiny of outlier payments and investor protests Modern Healthcare November 11 2002

Tenet Healthcare Corp., Santa Barbara, Calif., announced new billing and collection procedures for self-pay patients, largely conceding the claims of a Latino advocacy group that had accused Tenet of price-gouging uninsured patients. K.B. Forbes, executive director of the group, Consejo de Latinos Unidos, Los Angeles, hailed Tenet's "Compact with Uninsured Patients" as "everything that we wanted." Tenet also said it has settled a group of lawsuits, - - -
Under Tenet's new policy, the hospital chain will no longer pursue collections lawsuits against patients who are unemployed or whose only significant asset is their home.- - - - - offer self-pay patients the same rates received from managed-care plans
(subject to regulatory approval). Yielding to group, Tenet revises self-pay policy Modern Healthcare January 28, 2003

At a meeting this year with top brass at Tenet Healthcare Corp., the country's second-largest hospital chain, K.B. Forbes pulled out some snapshots. One showed a middle-age Hispanic woman standing in front of a tumbledown mobile home. "You have a lien on this property," Mr. Forbes told a startled executive. "You got it when this woman couldn't pay her hospital bill." Using hardball tactics such as these, Mr. Forbes, a 36-year-old political maverick, has emerged as a rare breed: a successful crusader for the uninsured.
Shortly after that January meeting, Tenet made a dramatic reversal.
All the plaintiffs agreed not to settle individually, since Mr. Forbes says the goal wasn't to win a financial windfall, but to seek "fundamental policy change" at Tenet.
Mr. Forbes goes national; A major shift at Tenet  The Wall Street Journal June 19, 2003

A senior citizens group also is suing Tenet for alleged price gouging.
Tenet reveals new U.S. probe :: Medicare payments at issue, hospital says San Francisco Chronicle January 3, 2003

- - - - this time a lawsuit in South Carolina. A class-action lawsuit on behalf of patients was filed yesterday against Tenet's 276-bed Piedmont Healthcare System, Rock Hill, S.C.
The lawsuit quotes a 1996 amendment to the sales agreement that requires Piedmont to price its services "at reasonable competitive levels" compared with nine other hospitals in the region. The lawsuit contends that as of Jan. 1, 1997, Piedmont's prices were the highest among the hospitals and that Piedmont failed to notify York County of the fact.
Tenet S.C. hospital sued over charges Modern Healthcare June 20, 2003

Added May 2007
Attorneys for a former patient said patients at Piedmont Healthcare System were billed fees as much as 90% higher than those of other area hospitals.
Suit claims over billing LA Times June 21, 2003

*Jan. 28 -- Tenet said it plans to offer discounts to uninsured patients. The company also settles 10 lawsuits that were coordinated by civic group Consejo de Latinos Unidos
CHRONOLOGY-Tenet Healthcare hit on many regulatory fronts Reuters, September 7, 2003

Added May 2007
Mr. Nickels also criticized complicated government regulations that make it hard for hospitals to offer discounts to the uninsured. Medicare regulations require strict adherence to a system under which hospitals can't bill anyone less than they bill the federal government.

As a result, hospitals run the risk of violating Medicare regulations if they slash rates to uninsured patients -- or at least if they do so without checking carefully with government authorities.

Recently, HCA and Tenet sought government permission to offer discounts to the needy uninsured. The responses from the government were far from clear-cut. HCA, though, cheerfully interpreted its note as a go; a Tenet spokesman said "It's our hope and expectation that we will eventually be able to offer a discount" to the uninsured.
House panel begins inquiry into hospital billing practices Wall Street Journal July 17, 2003

Added May 2007
Tenet Healthcare Corp., Santa Barbara, Calif., said it will implement discounts for uninsured patients in light of HHS' recent guidance that Medicare rules and regulations do not prohibit such discounts. The discounting policy should be implemented in all Tenet hospitals by June 30 (2004), except in Texas, where state law does not permit such pricing, the company said. Discounts for the uninsured were part of a "Compact with Uninsured Patients" that Tenet announced in January 2003 - - - - .
Tenet to move ahead with discounts for uninsured Modern Healthcare's Daily Dose Mar. 2, 2004

Added May 2007
Tenet Healthcare Corp. said Tuesday it will begin implementing a managed care-style discount pricing for uninsured patients at its hospitals, subject to state laws and regulations.
Tenet to discount prices for the uninsured Philadelphia Business Journal - March 2, 2004

Tenet subsequently complained of increasing numbers of uninsured patents and bad debts blaming its poor performance on this. Whether this was exaggerated to hide the fact that doctors were deserting Tenet hospitals and taking their patients with them is not clear. Acknowledging this might have compounded the problem.

How Fetter could address the problem without either refusing to treat, actively discouraging attendance or pursuing the poor for payment is far from clear. He has to do what he has to do to please the market and survive.

Added May 2007
Tenet on Wednesday discontinued its earnings guidance for 2004 and warned of big charges in the third quarter related to bad debts from uninsured patients.
Hospital Stocks Sentiment Dampened Over Past Week Reuters October 23, 2007

Added May 2007
"While we continue to work diligently to address the many challenges facing Tenet, we also are contending with the rising costs of treating uninsured patients," Tenet president and chief executive officer Trevor Fetter said in a statement.

"We are taking immediate action to manage and mitigate the steep increase in bad debt. Despite these actions, we expect future earnings to be impacted by this trend."
Tenet stock plummets as hospital chain lowers earnings expectations The Associated Press October 22, 2003

Added May 2007
Tenet and other hospital chains have struggled to collect payments after treating a growing number of patients who have lost health-insurance benefits or cannot afford co-payments and deductibles. About 70 percent of bills for which Tenet does not expect full payment are for uninsured patients, and 20 percent are for managed-care providers.

Expenses to cover unpaid patient bills rose 29 percent to $293 million, or 11 percent of net revenue, in the quarter, Tenet said.
Tenet to reduce costs as losses escalate : The second-largest U.S. hospital chain will focus on its most profitable facilities by shedding 27. BLOOMBERG NEWS May. 05, 2004

Added May 2007
The discounts directly reduced revenue, but they also reduced bad debt expense, so the policy didn't have a significant effect on Tenet's bottom line, the company said.
Tenet records $2 billion loss with legal, other charges ??? source Mar 8, 2005

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Price Increases in Tenet Hospitals

Starting in 1999 Tenet steadily increased its prices so that by 2002 it was charging much more than its competitors, sometimes more than double. It marked up its prices for drugs to 8 times costs compared with 4 times by other hospitals. Tenet and corporate advocates emphasised that almost no one paid these high prices, but this is not true. Their clear intention as publicly stated on multiple occasions after 1999 was to increase profits by charging more. Its enormous success shows that individuals and the whole system was ultimately paying more - much more. This was not negotiated and was unrelated to the quality of services provided. Instead there were complaints of poor care and needless very expensive and risky surgery.

While HMO's and Medicare still negotiated much lower prices with HMOs this extreme pricing schedule must have influenced the negotiations. Their main benefit was in increasing outlier, stop-loss and a similar payment to Medicare, HMO's and Workers Compensation. But not all payments were made in these ways. The uninsured and people insuring independently paid full inflated rates. Patients who were covered by HMO's who did not have contracts with Tenet and who were admitted to a Tenet hospital as an emergency were billed for the large extra amounts and had to pay this themselves.

Many of the reports describing the extent of price gouging came from studies conducted for the nursing unions. Instead of addressing their figures Tenet responded by attacking the messenger claiming that the unions were self serving which is certainly true but this does not invalidate the unchallenged results. In the end Tenet had to settle with the unions increasing their costs and pushing share prices down further. Tenet's earlier aggressive tactics were not forgotten by the unions and Tenet now had to get them off its back.

Tenet's headquarters and a large number of its hospitals are in California and much of the action occurred in this state.

The extent of the overcharging is revealed in extracts from some of the reports. Note Tenet's acknowledgement that they buy hospitals so that they can secure leverage. This allows them to increase charges. Tenet indicates that it intends to continue doing so. This is a key tactic for success.

This is what Ramsay Healthcare and Healthscope did in Australia although they were a little more constrained. Groups that did not do this went under. Patients became the meet in the sandwich as insurers and hospitals locked horns to test the strength of their leverage.

The analysis by the nurses (California Nurses Association) suggests that Tenet hospitals were much more aggressive than other hospitals in charging for drugs. Hospitals nationwide marked up their costs by about four times, on average, while Tenet hospitals charged more than eight times their costs, according to the analysis.
(This) is "a principal driver in their overall charges," the list prices that resulted in the higher Medicare payments, said Don DeMoro, the executive director of the Institute for Health and Socio-Economic Policy, the group that conducted the study. Nurses' Association Says in Study that Big Hospital Chain Overcharges Patients for Drugs New York Times November 24, 2002

Separately, the California Nurses Assn. on Monday released a report claiming that Tenet inflates drug charges at its hospitals by 736% above costs, or more than double the national average.
Tenet's Medicare Loophole to Close Soon, Analyst Says Hospital firm received $763 million last year in outlier payments, which a report says the agency will clamp down on. LA Times November 26, 2002

In California, where Tenet owns 42 of the state's 450 hospitals, the hospital chain charges far more than rivals for identical medical procedures.

In 2000, for example, Tenet's California hospitals charged an average of $73,038 for pacemaker implants, 81 percent more than the $40,452 charged by non-Tenet hospitals, according to state government figures analyzed by the Service Employees International Union. Tracheostomies, at $569,672, were 69 percent higher at Tenet than in the rest of the state, where they average $336, 579. "Tenet is engaged in turbocharging," said Steve Askin, health care research coordinator for the union in Los Angeles.

"Tenet's gross charges in California average between six and seven times its actual cost of delivering care," said Askin. For every dollar Tenet hospitals billed, he said, their actual cost was about 16 cents, according to state records. California's non-Tenet hospitals had an actual cost of about 36 cents for every dollar billed.
Tracheostomy charges increased 38 percent from 1999 to 2000 at Tenet hospitals, versus 13 percent at other California hospitals. Respiratory treatment with ventilator support increased 47 percent at Tenet facilities, compared with 22 percent at non-Tenet hospitals.
"Many of the charges for various cases and DRGs (diagnostic-related groups) are double for what everyone else is charging. That's an enormous red flag."
Redding Medical Center's average charge per in-patient day in 2001 was $15, 636. Mercy's average was $6,407 -- almost 60 percent lower.

Neither hospital actually collects those full charges, but, thanks to its higher markup, Tenet's Redding Medical Center makes out far better than its rival.

Redding Medical Center collected an average of $3,182 per in-patient day, while Mercy received $2,088. So the center's take for every day a patient spends in its hospital is 50 percent higher than that across town at Mercy.
"Higher charges have been a part of our managed-care pricing strategy, particularly in California," said Tenet CEO Jeffrey Barbakow.
---------------- -----------
An analysis of state data by the service employees union shows that Tenet's charges in Shasta outpace its rivals by big margins. For a coronary bypass with cardiac catheterization, Tenet's Redding Medical Center charged $228,793 in 2000 -- 184 percent more than the average $80,500 charged by the other four hospitals in Shasta County. ------------
Profiting from health care :: Hospital chain's steep prices blamed for raising costs for all San Francisco Chronicle November 14, 2002

The median charge at Tenet hospitals in California for cardiac valve and catherterization procedures is $221,399, while non-Tenet hospitals charge $104,520, according to state data analyzed by the Institute for Health and Socio-Economic Policy, a research group that works with the California Nurses Association.

A complicated case of pneumonia cost $30,500 on average in a Philadelphia Tenet hospital and $18,614 at non-Tenet hospitals, state data analyzed by the Service Employees International Union show.
Tenet Healthcare under informal SEC probe USA TODAY November 18, 2002

In the 10 California counties where Tenet operates, its average charge for a hospital stay was $33,547, 63 percent more than at other state facilities, according to patient discharge data from the California Office of Statewide Health Planning and Development as analyzed by the Service Employees International Union.
Between 1999 and 2000, Tenet's average charges in Contra Costa County, where it operates three hospitals, rose by 123 percent, while the other six hospitals in the county raised their average charges by 13 percent.
In Riverside and Los Angeles counties, where Tenet operates about one out of every five hospitals, it raised charges two or three times as much as rivals.
Tenet raises prices more quickly than competitors :: Union asks state to look at charges San Francisco Chronicle November 20, 2002

Added May 2007
Hospital operator Tenet Healthcare Corp. raised its charges for patient care in Orange County at more than triple the rate of smaller competitors after it bought 10 hospitals here in the mid- 1990s, a Register analysis of state billing data shows.

From 1996 to 2001, Tenet's average daily inpatient charge in Orange County grew 101 percent, compared with 28 percent for non- Tenet hospitals. Tenet's charges for outpatient services here rose 119 percent, compared with 43 percent for its competitors, according to the data.

Last year, eight of the county's 10 highest-charging hospitals belonged to Tenet. The Orange County hospital at the top of that list was Tenet's Western Medical Center in Santa Ana. It billed an average of $9,453 a day per patient. That was $2,500 more than the highest non-Tenet hospital -- UCI Medical Center -- and nearly twice the countywide average.
Tenet, like other hospitals, rarely receives the full amount it bills. But the bills matter: If the charges are high enough, they trigger extra payments provided for under arcane rules governing Medicare and in contracts between hospitals and private-sector insurers.

Tenet is not alone in its billing practices. Consultants advise many hospitals to push the envelope on the Medicare rules, though experts say Tenet plays the game better than most.
Aggressive billing was simply part of Tenet's business strategy, the company has said.
Health-care experts say Tenet and other large hospital chains have pursued a strategy of buying smaller competitors, then using their increased market share to raise prices. Tenet concedes as much. In a filing with the Securities and Exchange Commission, the company noted that "having concentrations of hospital beds within geographic areas helps the company to contract more successfully with managed-care payors." It said it would continue to acquire hospitals to drive financial growth.
Nonetheless, Tenet, like some other large chains, centrally negotiates its contracts with insurers, so it could use greater market penetration in one area to secure better terms in Orange County and elsewhere.
Data provided by the Service Employees International Union shows Tenet's hospitals in Orange County bill more than their competitors for every one of the 20 procedures that account for the bulk of hospital costs.
For heart failure and shock, Tenet charged an average of $26,257, compared with $15,488 for other hospitals. And for coronary bypasses, Tenet's average charge was $147,721, compared with $90,461 for the non-Tenet facilities.
Tenet's hospitals O.C.'s most expensive // Since 1996, it has raised its charges for patient care at more than triple the rate of smaller competitors.
The Orange County Register November 24, 2002

In 2000, for example, Tenet's California hospitals charged an average of $73,038 for pacemaker implants, 81 percent more than the $40,452 charged by non-Tenet hospitals, according to state government figures analyzed by the Service Employees International Union. Tenet reveals new U.S. probe :: Medicare payments at issue, hospital says San Francisco Chronicle January 3, 2003

Tenet Healthcare Corp., Santa Barbara, Calif., and HCA, Nashville, own 44 of the nation's 100 most expensive operating rooms, according to a report by the California Nurses Association and the Institute for Health and Socio-Economic Policy, Orinda, Calif. Other for-profit companies accounted for an additional 17 of the most-expensive ORs, meaning that for-profit companies owned 61 of the 100 most-expensive ORs, the report said. - - - The report was based on a comparison of federal Medicare cost reports for about 4,500 U.S. hospitals for fiscal 1999 and 2000. In addition, - - - - for-profit hospitals accounting for nine of the 10 ORs with the highest markups.
Criminality in Managed Care AP Newswires May 23, 2003

Nine Texas hospitals were among the 100 most expensive hospitals in the country in a survey released Wednesday, and embattled Tenet Healthcare Corp. owns eight of them.
The survey monitored all charges for inpatient and outpatient services and other financial categories, and found that the nation's 100 most expensive hospitals mark up their gross charges by an average of 525 percent over their costs.
Tenet Healthcare owns eight of nine Texas Hospitals labeled most expensive The Dallas Morning News June 12, 2003

Nine of the 100 most expensive hospitals in the United States are in South Florida, and all but one are owned by Tenet Healthcare Inc., according to a study released on Wednesday by the California Nurses Association. - - - It found that Tenet owns 64 of the highest-cost hospitals, including those ranked 1-14 on the list.
The report indicated that chain hospitals generally charge far more than independent hospitals and those run by nonprofit groups
Tenet hospitals are priciest, study says South Florida Sun-Sentinel June 12, 2003

A study for the California Nurses Association said that investor-owned hospitals account for 82 of the top 101 acute-care hospitals as ranked by charge-to-cost ratio, including 64 hospitals operated by Tenet Healthcare Corp For-profits lead in charges exceeding costs: CNA Modern Healthcare June 11, 2003

Added May 2007
CITING "SIGNIFICANT PUBLIC health and consumer protection issues," a congressional committee launched a formal investigation into hospital billing practices that often require uninsured patients to pay rates that far exceed what other payers, including the government and HMOs, are charged. The House Energy and Commerce Committee sent seven-page letters to 20 hospital and health systems nationwide asking them detailed questions about their finances and their billing practices in relation to both the uninsured and major payers, such as insurers and managed-care companies.
At the heart of the congressional investigation is the thorny issue of "charges," which are the retail prices that hospitals list for their services. According to the letter, these rates are "often inflated far beyond [the hospitals'] actual costs and reasonable profit." Some payers are able to negotiate discounts and pay far less, but "individual uninsured patients are expected to pay this full, undiscounted 'sticker' price," the congressional letter said. Added Mr. Johnson: "In some cases, it appears that the very people who can least afford it are paying the full sticker price for hospital services."
The letter, invoking data from a California governmental body, cited the case of a California chain that had less than 2% uninsured patients. This small sliver of patients "accounted for as much as 35% of the chain's total profits," the letter said.
House panel begins inquiry into hospital billing practices Wall Street Journal July 17, 2003

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Class Actions

Lawyers were soon advertising for patients to join their class actions claiming retribution and compensation for the overcharging. Tenet settled these. Like others it attempted to address the problem by creating ways for patients to get credit so that they could pay. But they still carried the debt so it was simply moved on.

Added May 2007
- - - - - - filed a lawsuit on behalf of a proposed nationwide class of individuals residing in the United States who, from February 1999 through the present, received treatment at a Tenet Hospital, and who were uninsured or partially insured at the time of treatment. The lawsuit charges that Tenet Healthcare Corporation, Tenet Healthsystem Hospitals, Inc., and related Tenet companies (the Defendants) charged uninsured and partially insured individuals who were treated at Tenet hospitals unfair, illegal and unconscionable rates for medical services and products. The case, entitled DelGadillo v. Tenet Healthcare Corporation, et al., was brought in Los Angeles Superior Court. The DelGadillo case has been joined with other Tenet cases alleging the same practices, and is now pending as Tenet Healthcare Cases II, J.C.C.P. No. 4289.
The complaint specifically alleges that Defendants imposed grossly excessive charges on patients who did not have health insurance coverage or who were not insured by a health insurance carrier in contract with Tenet. Plaintiffs further allege that Defendants used coercive, unfair and fraudulent collection methods to collect the improper charges, and issued negative reports to credit reporting agencies on patients who failed to pay the exorbitant charges.
Tenet Hospital Excessive Charges Class Action From lawyers (Lieff Cabraser Heimann & Bernstein, LLP) web site received August 31, 2003

Added May 2007
Tenet Healthcare Corp., Dallas, said it reached an agreement to settle lawsuits in nine states alleging that the company overcharged uninsured and underinsured patients for prescription drugs and other medical products and services. In its annual 10-K securities filing, Tenet said it had reserved $30 million for claims made under the settlement.
Tenet offers uninsured settlement, reserves $30 million Modern Healthcare Daily Dose March 11, 2005

Added May 2007
Tenet and its subsidiaries did not admit liability as part of the settlement, which is subject to court approval, and continue to dispute the lawsuits' allegations.
As part of the proposed settlement Tenet agreed to provide for a period of four years financial counseling to patients, treat the uninsured fairly and with respect, regardless of their ability to pay for services, offer a uniform credit policy, offer reasonable payment plans and payment schedules and give the uninsured discounts comparable to the hospital's managed care rates.
Class-action lawsuits are pending against Tenet and some of its hospitals in Alabama, California, Florida, Louisiana, Missouri, Pennsylvania, South Carolina, Tennessee and Texas. If the nationwide settlement is accepted, those cases could be subject to dismissal.
Tenet to settle pricing class-action lawsuits March 11, 2005

Added May 2007
If you are a Class Member and you paid out-of-pocket for medical treatment and would like to participate in the proposed settlement, you must complete and submit the Proof of Claim Form to the Settlement Claims Administrator so that it is postmarked no later than January 11, 2006.
No. Tenet has vigorously denied and continues to vigorously deny all of the claims, denies any and all allegations of wrongdoing, and believes that the class action has no merit, they have agreed to enter into this Settlement to put to rest all controversy and to avoid further expense and burdensome, protracted and costly litigation which would be involved in defending this Class Action and any future actions, without in any way acknowledging fault or liability.
Welcome to the Tenet Healthcare Cases II Settlement Website April 28, 2005

Added May 2007
The settlement class includes all uninsured patients who received medically necessary services at any of Tenet's hospitals from June 15, 1999, to Dec. 31, 2004, and overpaid for those services. Members of the class still could appeal the settlement.
Tenet settlement in uninsured billing case approved Modern Healthcare Daily Dose August 9, 2005

Added May 2007
Tenet is testing a similar venture with UnitedHealth (UNH:NYSE) , which operates a bank that provides financing to patients with "consumer-driven" health plans that can require big out-of-pocket payments.
HCA Watchers Take Sides The (Melissa Davis) June 22, 2005

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Other Investigations

A large number of other agencies including Medicare and Medicaid, the California Assembly Health Committee, California Department of Health Services, Workers Compensation, the California Public Employees Retirement System, and legal firms all focused their investigations on Tenet's pricing. The press looked at publicly available information and spoke to people who had examined their bills. They told of the avalanche of bills.

But when Dresser, who used to price medical supplies for a living, got an itemized bill, he was stunned: The charges exceeded $50,000. A single coronary stent, a small tube inserted in a heart valve or artery, was listed at $12,000 -- about 10 times the actual cost to hospitals. Among other charges: $21 for one aspirin.

"The markup is too much," Dresser complained.

But by its own admission and public filings, Tenet pushed the envelope further than most. In the last year alone, company insiders say, Tenet hospitals raised their prices twice.

Although hospitals closely guard the retail rates for procedures and supplies, public records show how rapidly prices have been rising at some Tenet hospitals.

At the 384-bed Centinela hospital, for example, the retail charge per patient per day totaled $12,186 in the second quarter of this year. That was up 72% from the same quarter two years earlier, - - - - the average retail charge per patient per day rose 33% in that same two-year period, to $5,389
Centinela's operating margin -- or the percent of revenue that is kept as income after expenses -- was 34% in the second quarter. That was 10 times the average for 436 for-profit and nonprofit California hospitals.
His (patient) retail charges came to $57,833. About $23,000 was for medicine, which, Rosefsky's physician told him, was five times what it actually cost the hospital.

Then there were smaller charges: $250 for one drape sheet, $15 for a disposable glove.
Tenet Under Closer Exam :: Pricing policy may have resulted in excessive Medicaid payments, some analysts say. LA Times November 11, 2002

Among hospital chains operating within California, Tenet Healthcare -- the nation's second-largest for-profit health system -- has the highest average charge for injuries and illnesses that most often bring elderly patients to hospitals, a recent Bee analysis of hospital financial data found.
Legislators to eye billings by hospitals The Sacramento Bee December 5, 2002

A year ago I had cataract surgery performed in one of Tenet's hospitals, and when I asked for a statement I was shocked. I had two eye drops delivered before surgery, and the pharmacy bill was $2,223.90. I was awake at all times. They charged $134.90 for oxygen, which I never had. For a period of 15 minutes in the operating room, they charged $3,859. LETTERS :: Tenet Policies Continue Overpricing Cycle LA Times: December 22, 2002

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Workman's Compensation and Orthopaedic procedures

The Californian Senate Industrial Relations Committee held hearings into the possible abuse and misuse of the Worker's compensation system by Tenet. The nursing unions in their submission drew attention to the absence of any system for recording and monitoring payments and the absence of any clinical monitoring, contrasting it with Medicare. There was no way of determining whether there had been overcharging or what they called "utilization manipulation". They urged changes, and an urgent review.

They described the way in which Tenet targeted complex orthopaedic procedures like spinal surgery, the large number which were Workman's Compensation cases and the major complications of such surgery. Workman's compensation paid nearly 50% more than competitors for spinal procedures, They pointed to what had happened in Redding hospital with Cardiac procedures and implied that the same may have happened in orthopaedics. Tenet in its submission strongly disagreed with the findings and criticised the methodology.

Separately on Wednesday, state Senate President Pro Tem John Burton (D-San Francisco) called for an investigation into allegations that Tenet overbilled for workers' compensation cases. Dissident Urges Tenet Management Change LA Times December 12, 2002

My testimony will focus on Tenet Hospitals and utilization manipulation. This is one of the three principal strategies Tenet Healthcare Corporation has employed to maximize profit by increasing revenues while cutting costs to the bone.
Every dishonest provider knows that, any day, Medicare investigators might come calling. Yet, even though the Workers Compensation payment system is susceptible to outlier manipulation in the same manner as Tenet has admitted manipulating the Medicare outlier system, no such program exists in the Workers Comp. system.
Inpatient hospitalization in Workers Compensation is primarily for orthopedic surgery. Fully one-third of inpatient hospitalizations in California paid for by Workers Comp are for just five diagnoses (DRG) related to spinal and back surgery. Orthopedic procedures as a whole - including spinal cases - account for more than 60% of all Comp. hospitalizations and more than two-thirds of Tenet Workers Comp hospitalizations in California. Both statewide and especially in the Los Angeles-Orange County area where Tenet’s Workers Compensation business is concentrated, orthopedic cases account for a larger percentage of Tenet than non- Tenet Workers Compensation cases. Since studies have shown that spinal surgery involves a very high rate of complications and failures, any system of care in which it holds such a predominant place should be especially watchful to ensure that patients are not being subjected to unnecessary or inappropriate treatment
The second fact - the high rate of orthopedic surgery in the Workers Comp system - is of even greater concern, because patient safety as well as costs are at stake.
But for spine-related admissions aggregated, Workers Comp pays an average of 50% more per admission. Tenet officials have proudly described to investors the ways in which they "aggressively worked to grow high acuity services," and the central role of orthopedics in that effort.
Chief Operating Officer Thomas Mackey, and other senior officials specifically identified ‘orthopedics’ as central to Tenet’s strategy for increasing and sustaining double-digit quarterly earnings growth.
Surely, we need to determine whether or not similar problems exist in the other key profit center, orthopedics.
- - - - lend urgency to the need for California’s Workers Compensation Insurance system to conduct independent audits of Tenet hospitals in California
Tenet Hospitals and Workers Compensation in California: Utilization Manipulation: Testimony presented to the Senate Industrial Relations Committee January 15, 2003 Tom Moore, Jr., Consultant on Health Policy and Programs Service Employees International Union

An analysis presented to the committee by an affiliate of the California Nurses Association is fatally flawed because of its reliance on gross charges and misleading comparisons between unlike facilities.  Gross charges simply do not accurately reflect what hospitals actually receive for providing care to patients, and any attempt to make the case that they do is misleading.
Tenet Offers Testimony at California Senate Committee Hearing Company Seeks Regulatory Change to Reduce Influence of Gross Charges From Tenet Healthcare web site January 15, 2003

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Tenet Changes Billing Structure (Added May 2007)

Tenet has a new strategy to more tightly control its billing. At the same time its continued emphasis on buying to secure the leverage needed to push up prices is worrying. Tenet admits the price gouging was board policy and this would surely put it into a position to do this more effectively next time.

Tenet Healthcare Corp., Santa Barbara, Calif., said it plans to consolidate 56 billing offices into eight regional offices in a three-year project that will cost $275 million and eliminate 300 jobs.
The setup also will enable Tenet to receive information about each hospital's operating performance more easily and more quickly, spokesman Gary Hopkins said.
Tenet to consolidate billing into regional offices Modern Healthcare's Daily Dose June 13, 2003

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Web Page History
This page created July 2003 by
Michael Wynne
Updated and revised May 2007