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USA section    Series :- Tenet Healthcare and its Doctors

Tenet Has Problems With its Doctors

Introductory page
This corporate web site addresses the issues of corporate health care within a broad framework. A web page describing this broad context should be considered as an introduction to each page on the web site. If you have not yet read it then
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Content of this page
This page deals with medical whistle blowing and with the impact of the scandal on the doctors who referred patients to Tenet. Many became "splitter physicians". It examines the purchase of hospitals by physicians



The series:- Tenet and its doctors
In July 2003 I wrote a web page titled "Tenet Health Care and its doctors" which included the story of Tenet's relationship with its doctors going back into the 1990s. In 2007 I put the material about Redding hospital into a separate web page and wrote two more about this revealing scandal within a scandal. The kickback allegations too had become a major player in the wider scandal. This has also been moved to a separate web page and updated. More Tenet sagas which involve doctors have come to light and these throw additional light on the many problems in Tenet's operations. While they deal with more than just the doctors they all contribute to the story of doctors and form a saga. I have therefore arranged them as a series called "Tenet and its Doctors".

 The web pages are

Tenet Has Problems With its Doctors



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Whistle blowing and the Response

Doctors come forward
With Tenet's loss of credibility its ability to discredit its medical critics was eroded. Increasing numbers of doctors came forward to expose what was happening or to criticise Tenet. Some of these are described other pages in this series of web pages. Some physicians challenged Tenet's attempts to silence them. Their colleagues gave support.

Sept 2003 Twelve Oaks Hospital
In a letter fielded by the FBI early this month -- and now in other agency hands as well -- a whistleblower accused Twelve Oaks of abuses that, some say, are fundamental to Tenet's business model.

"The Federal Bureau of Investigation needs to extend its probe into the illegal activities of Tenet Healthcare to include Tenet Healthcare's Twelve Oaks Hospital in Houston, Texas, as part of the national investigation of fraud, illegal billing of Medicare, and illegal physician contracts," the whistleblower wrote. "Some of these, if not all, have been committed against the community by the current administration of Twelve Oaks."
Whistleblowers Piping Up at Tenet The (Melissa Davis) September 30, 2003

Dec 2005 Tenet retaliated
And finally, high-profile attorney Alan Dershowitz has asked the Supreme Court to consider a case involving a physician who claims that Tenet retaliated against him for exposing problems with patient care.

Dershowitz -- together with both the Association of American Physicians and Surgeons and the Association of Trial Lawyers in America -- is seeking a ruling that would protect medical whistleblowers in the future.

"This case epitomizes why doctors are afraid to report medical errors and problems," said Larry Huntoon, M.D., chairman of the AAPS Committee to Combat Sham Peer Review. "To bury their own mistakes, hospitals label doctors as 'disruptive' and file trumped-up charges of wrongdoing. Then they count on the 'where there's smoke, there's fire' perception to make the doctor the scapegoat."

Tenet has prevailed in the case, filed by reproductive specialist Gil Mileikowsky, so far. Mileikowsky claims that Tenet essentially destroyed his career after he testified that a patient had both fallopian tubes removed -- without her consent -- at one of the company's hospitals. Mileikowsky is among a swelling crowd of physicians who say they have come under attack for exposing problems with hospital care.
Looking ahead, Tenet could find itself embroiled in a Supreme Court case next. In a press release issued Tuesday, AAPS boasted that it had assembled a "dream team" of doctors and lawyers to fight a potentially precedent-setting case against one of the company's hospitals.
"Physicians who are entrusted with the care of their patients can see their professional careers destroyed if they dare to challenge a hospital's practices," Dershowtiz said. "When a 'whistle-blowing' physician is retaliated against, it threatens not only the physician's livelihood, but the care of all patients. This is a case, therefore, that affects every patient and potential patient in America."
New Tests for Tenet The (Melissa Davis) December 22, 2005

Dr Mileikowsky had obtained powerful support and the supreme court has since the above report overturned the previous court case by ruling in his favour. Dr Mileikowsky put the interests of the patients first by testifying for them, and by exposing the failure of Tenet's hospital peer review committee to consider this serious failure in medical standards. The sector has earned itself a formidable opponent. Mileikowsky has formed the Alliance for Patient Safety. This has a web page containing many examples of the persecution of doctors who speak out against Tenet, HCA and other groups. He targets failures to protect patients, the failure of peer review and the failure of accreditation. He proposes strategies to address the problem. The web link above is well worth some attention.

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Tenet, doctors and the drug companies
The Cleveland Clinic is one of America's most credible and renowned academic centres. In spite of the Tenet/NME scandal in the 1990s, the court settlements, and the many documents I sent to one of their senior surgeons in the mid 1990s, the clinic entered into a management agreement with Tenet.

In regard to the following report, we do not know if there are financial or other relationships between Tenet, the Cleveland clinic and Merck & Co. In other situations like that reported here the hospital or university have been found to benefit substantially from research or other grants from the company. That is not reported here.

Feb 2006 Doctor fired after giving evidence
And in other news, prominent cardiologist Eric Topol will leave the clinic about two months after signing a new one-year contract, according to Crain's Cleveland Business, a sister publication of Modern Healthcare. The departure comes after Topol testified in December 2005 at the first trial involving Vioxx, suggesting that the controversial painkiller made by Merck & Co. posed significant risks. Within days, the clinic eliminated Topol's position as provost and chief academic officer at the Cleveland Clinic Lerner College of Medicine at Case Western Reserve University. Topol has said the demotion resulted from his criticism of Merck and Vioxx. Clinic officials have said that was not the case. At deadline, neither Topol nor the clinic could be reached for comment.
Cleveland Clinic to buy hospital, turmoil continues Modern Healthcare February 2006

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Conflicts of Interest

One of the consequences of operating as a marketplace is that staff including doctors become far more market focused and amenable to financial arrangements which overstep ethical parameters. Tenet has been particularly commercial and as these pages show its doctors have become so too.

Feb 2006 Doctors commercial ventures
Meanwhile, the (Cleveland) clinic is preparing to tighten its conflict-of-interest rules following criticism over the business interests of Chief Executive Officer Toby Cosgrove, the Wall Street Journal reported. Cosgrove, a heart surgeon, until recently was a partner in Foundation Medical Partners, a venture capital fund created by the clinic. The fund also owns an interest in a medical-device company that does business with the clinic. According to a law firm hired by the clinic to review the matter, Cosgrove did not fully comply with disclosure policies, the Journal reported.
Cleveland Clinic to buy hospital, turmoil continues Modern Healthcare February 2006

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Ownership of hospitals
The marketplace places doctors in endless situations where conflicts of interest exist and then puts strong pressure on them to give financial matters priority. Hospitals go to considerable lengths to align doctor's financial interests with those of the company.

The ownership of hospitals by doctors who work in them must be preferable to ownership by the share market. But the marketplace context does place considerable pressure on them to skimp on care in order to maintain profitability. The conflicts of interest created suggest that the practice may not be ideal.

The concern then is that many of Tenet's hospital's are being purchased by groups of doctors, often those working in the hospitals. The troubled Redding Hospital and Alvarado Hospital are only two examples.

A particularly worrying example occurred in California. Dr Kali Chaudhuri was a medical entrepreneur who was caught up in a primary care scandal of monumental proportions. The sad story is told by Barlett and Steel in their 2004 book "Critical Condition" (pages 123-154).

By all accounts he was a plausible and charismatic con man. He established a physician management company called KPC. When MedPartners entered bankruptcy in 2000 Chaudhuri persuaded the receivers to sell him their Californian operations. His company now cared for nearly one million patients and one thousand doctors.

Very rapidly things went from bad to worse as KPC failed to pay its bills and its specialists. Companies stopped delivering vital supplies, specialists resigned and insurers withdrew their patients. Many patients had extreme difficulties in getting treatment and when the company collapsed thousands of unsorted medical records ended in a warehouse and were lost to patients. There was no money to sort of search them.

In spite of this recent bankruptcy Chaudhuri still had the money to fund the purchase of some of Tenet's hospitals in 2004. There were objections and a compromise was reached in which it was claimed he had no influence. Quite how a major investor in a business enterprise can have no influence is difficult to understand.

Nov 2004 Chaudhuri buys hospitals
Two physicians are asking Orange County, Calif., officials to look into the pending sale of four Tenet Healthcare Corp. hospitals to Integrated Healthcare Holdings, Costa Mesa, Calif., because of their concerns about a physician investor in Integrated, the Los Angeles Times reported.
Fitzgibbons and Robert Steedman, Western Medical's current chief of staff, criticized Integrated for working with Kali Chaudhuri, an orthopedic surgeon and founder of KPC Medical Management, a clinic operator that went bankrupt in 2000.
Docs seek county review of Calif. hospital sale Modern Healthcare November 24, 2004

Dr. John Regan is trying to cure a bigger problem within his own profession after treating people with back trouble for fifteen years, "The biggest frustration that physicians are feeling is that they've lost control or they're losing control over patient care."

Dr. Regan and a group of more than 100 other Los Angeles physicians are buying a former Tenet Healthcare hospital, because they are tired of hassling with hospital bureaucracies and insurance middlemen,
Jeremy Hogue with Spectrum Medical Center Partners says across the country, doctors are buying failed hospitals from companies like Tenet and HCA and trying to turn them around, "Healthcare's a very inefficient industry and we think that we can not only add some efficiency to it, but also provide better care."

Doctors have gone into business before, with disastrous results. In the late 80's, Congress had to step in to stop widespread abuse and conflicts of interest among physician-owned labs and diagnostic centers.
The (American Hospital) association say some doctor-owned facilities tend to cherry pick the least sick patients with the most insurance in the community. Pollack says that forces local non-profit hospitals to handle the uninsured while operating critical, yet money losing areas like emergency rooms, trauma centers, and burn units, "While you cherry pick away from the community hospital the well-insured cases, it's real hard to be able to then sustain these essential public services."

Hogue argues that putting doctors in charge of both business and medical decisions may be the only way to keep some hospitals open at all, "It's hard to argue against better care at a lower cost. And that at the end of the day is the story of what we're trying to do here."
Health Alert: Doctors purchasing hospitals National-NBC News March 15, 2005

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Tenet Losing its Doctors

Splitter Physicians
Reports indicate that many doctors left Tenet hospitals in the years after the scandal. Doctors who worked at other hospitals (called splitter physicians) moved more of their patients to Tenet's competitor's hospitals. More doctors became splitters. As a consequence of this Tenet's hospital profitability plunged and it made large losses.

Aug 2005 Splitter physicians
Tenet has, in fact, seen many physicians do just that (take their patients to other hospitals) in some of its largest markets. And it risks losing other doctors who, for now, continue to practice at Tenet hospitals with hopes that they may somehow regain their former stature.
To recover, Tenet must win over so-called splitter physicians like Sutton, who admit patients to competing facilities as well as the company's own.
Tenet's Fraying Ties to Doctors The (Melissa Davis) August 23, 2005

Nov 2005 Tenet describes it
Tenet said many physicians are splitting their admissions between a Tenet hospital and a competing hospital because of uncertainty surrounding the company and a drop in capital expenditures Tenet initiated to build cash reserves.
Tenet's loss soars with hurricanes, drop in volume Modern Healthcare Daily Dose November 1, 2005

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Abandoning Kickbacks
What is not reported by the analysts, and we can only guess at, is that Tenet would have been forced to abandon many of the financial relationships, which had bound doctors, sometimes reluctantly, to Tenet's hospitals. Doctors in the 1990s referred to Tenet/NME's arrangements and contracts with doctors as golden handshakes that became golden handcuffs. These had now been removed.

While financial carrots might have drawn doctors to its hospital these would have created a degree of professional angst which would have made them uncomfortable and soured loyalty.

Aug 2005 Difficult to get doctors back
The decline in commercial admissions "means that the company has not made much progress in reclaiming referrals from departed [splitter] physicians," writes Skolnick, a veteran industry analyst who has a neutral rating on Tenet's stock. "It is not enough to simply assert that the company and the hospitals could or should achieve industry-average margins. It is much harder on Main Street to get doctors to refer patients than Wall Street supposes."

Moreover, critics say, Tenet has never enjoyed a warm relationship with many of its referring physicians in the first place. Instead, they say, the company has often treated doctors as expendable even though it relies on them for virtually all of its business.
Tenet's Fraying Ties to Doctors The (Melissa Davis) August 23, 2005

Apr 2006 A tainted reputation
Federal prosecutors' allegations that Tenet paid illegal kickbacks to physicians caused more doctors to avoid its hospitals. Declining admissions pushed Tenet to a third annual loss in 2005.

Tenet has a ``tainted reputation that has slowed its recruitment'' of doctors, said John Lehman, an associate dean at Vanderbilt University's Owen Graduate School of Management in Nashville, Tennessee.
Tenet Healthcare Courts Doctors in Search of Financial Recovery Bloomberg News April 14, 2006

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Competitors capitalise on Tenet's problems
Companies that were not restricted by such strict regulatory oversight now prosper at Tenet's expense. They have far more freedom. Tenet has been unable to keep up.

It should be noted that HCA (then called Columbia/HCA) settled a US $1.7 million lawsuit that included paying kickbacks to doctors. It restructured its arrangements with doctors to make them acceptable. Quite how, what is described below, differs in intent and consequence from what it did during the fraud is obscure. The arrangements are probably structured so that they are legal, even though most reflective citizens would consider them unacceptable. HCA has enormous influence in the corridors of power.

Aug 2005 HCA courts physicians
Such an attitude contrasts sharply with that being embraced by Tenet's larger and healthier peer. In the midst of a severe industry slump early last year, urban hospital giant HCA (HCA:NYSE) began to court physicians with offers of partnerships in lucrative outpatient facilities. Today, the company continues to employ an entire division -- including designated specialists at each of its 12 regional offices -- that constantly seeks out additional outpatient opportunities.

Peter Young, a business consultant at HealthCare Strategic Issues, believes the very future of health care hinges on physician relationships like those being forged by HCA. Villwock sees Young's point. He just worries that Tenet doesn't.
Tenet's Fraying Ties to Doctors The (Melissa Davis) August 23, 2005

Dec 2005 Doctors now have new loyalties
But Young (analyst) sees major complications. Notably, he doubts that physicians will "magically" start reappearing at Tenet hospitals with their patients. He points out that many of those physicians have forged relationships with other hospitals that offer attractive perks, such as joint ventures, that should keep them where they're at. Ultimately, he suggests that the industry has changed considerably -- with Tenet unable to keep up -- throughout the company's woes.
Push Comes to Shove at Tenet The (Melissa Davis) December 9, 2005

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Tenet tempts doctors
Tenet's response to the problems was not to make the improvements needed to run down facilities to improve care for patients. It sought carrots it could use to tempt doctors back, such as parking facilities and computer services. This is a typical market strategy.

I am not suggesting that better computer services and contented doctors focusing on their patients rather than the frustration of parking don't impact positively on care but this was not the focus or why they did this. In the market money must come first. Doctors in a marketplace recognise that this is the way the system works and come to think this way too.

Fetters prescription for doctors
In Trevor Fetter's prescription for restoring profits at Tenet Healthcare Corp., the second-largest U.S. hospital chain, premium parking spaces and Internet access to patient records are as important as medicine.

Chief Executive Officer Fetter must win back doctors who have been sending patients to rival hospitals for the past three years. Doctors scaled back referrals beginning in late 2002, following revelations that the Dallas-based company inflated prices used for certain bills submitted to Medicare.
With Reynold Jennings, his chief operating officer since 2004, Fetter is pushing company hospitals to learn what doctors want and woo them back -- legally. In some cases, that means better parking or online access to patients' charts.
``A lot of it comes down to the economics the doctors are facing, and a doctor doesn't make money driving from his office to the hospital,'' said Bill Henning, chief executive officer of Tenet's 118-bed Centennial Medical Center in Frisco, Texas, about 45 minutes north of downtown Dallas. ``There are many intangibles that doctors are looking for when they choose where to send their patients.''
At older locations, management is redoubling efforts to win over local doctors and appease the ones who stayed.
Tenet Healthcare Courts Doctors in Search of Financial Recovery Bloomberg News April 14, 2006

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Marketing for doctors
Successful marketing has been the recipe for success in both Tenet and HCA. In the 1990s scandal every member of staff was expected to market and do so by making phone calls or visiting potential admission sources. Targets were identified and the marketing process focused on them.

The new problem of splitter physicians is dealt with in the same way. In a competitive market system massive sums of money which could go to provide better care must be diverted to marketing in order to compete. This contributes to the high costs of care in market systems like the USA.

Apr 2006 Marketing strategy
In October, CEOs from each hospital were told, as part of Tenet's doctor-courting campaign, to visit more than 12,000 physicians in 18 months, a cornerstone of Jennings' profit- building strategy.

``It's what I used to do to be a success,'' said the 59- year-old Jennings, a former pharmacist and hospital chief executive, in a telephone interview last month. ``I'm under no illusions: It will not be a one-year solution to the amount of volume we lost.''

Managers meet with doctors to pitch their hospital's programs and ask how they can improve. The priority is to reach so-called splitter physicians, who send some patients to Tenet hospitals and the rest to others.

Raising referrals from each of the 8,800 splitter physicians by two patients a year would have a significant impact on revenue, Tenet says.
Tenet Healthcare Courts Doctors in Search of Financial Recovery Bloomberg News April 14, 2006

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A deal to attract doctors and patients
By brokering a deal to make Physician Quality Reports free to patients by paying for them itself Tenet could attract both doctors and patients. If patients can access information about Tenet's doctors free then they will do so first and may not look at those where they must pay.

In addition the deal allows both the hospitals and Tenet to promote themselves and their services on the site. One wonders about the level playing field that we depend on to make the market work.

May 2006 Quality Reports
Currently available at a price, HealthGrades Physician Quality Reports -- which list a doctor's board certification and disciplinary actions -- will now be available for free to consumers looking for information on physicians affiliated with Tenet Healthcare Corp., under terms of an agreement announced today. - - - - - it was reported that Health Grades expects to receive about $2.5 million in fees from Tenet during the first year of the agreement.
As part of the deal, Tenet physicians will also be able to post additional information such as education, office hours and insurance plans accepted. Tenet hospitals will also be invited to post additional service information.
Tenet to pay for HealthGrades info on its docs Modern Healthcare Daily Dose May 4,2006

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Uninsured patients
Tenet publicly attributed its losses to a greater number of uninsured patients. It is likely that reduced doctor referrals and the abandonment of its
gouging of the uninsured also contributed.

Mar 2006 Bad debt
Admissions are down at Tenet hospitals nationwide, and the company is struggling to deal with growth in bad debt from the rising number of uninsured and underinsured patients. In Palm Beach County, the company also has struggled to find enough specialists to cover emergency patients.
Tenet CEO: We're on the way back The Palm Beach Post, Florida March 27, 2006

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Tenet's targeting of profitable outlier payments rebounds
Tenet could no longer scam the system by the overuse of profitable
outlier payments. These pay extra for the complex and complication prone surgical procedures (eg cardiac surgery). Tenet had targeted these complex services and invested its resources in them. It is likely that these patients now either lost money or were only marginally profitable.

In building up these sophisticated services (eg Redding hospital) it had neglected other at the time less profitable services in its hospitals and allowed these to become run down and shabby. It now depended on them. It was selling hospitals to gather the funds to settle law suits and had none to spare for development.

Aug 2005 Hospitals run down
To be sure, physicians like Sutton have pleaded with Tenet for improvements. But they believe that Tenet has largely ignored their cries and allowed the company's hospitals to slide as a result. Ultimately, they believe that Tenet lacks the vision displayed by some of its peers and -- unless it finally reaches out to them -- may never see the light.
In the meantime, Medicare data show, Houston Northwest's financial results have already taken a hit. With revenue from typically high-margin outpatient cases declining -- and operating expenses on the rise -- the hospital saw its profits plummet by nearly 80% last year. Moreover, Sutton says, that free fall has continued and now threatens to leave the hospital operating in the red for the first time in memory.

Even Caymus Partners analyst Jeff Villwock, a longtime critic of Tenet, marvels at such deterioration.

"Houston Northwest is an incredible, incredible franchise," says Villwock, who conducts research on behalf of the Tenet Shareholder Committee, a group that is sharply critical of Tenet's management. "If Tenet's not making money there, it shows that the company can't make money anywhere."
Tenet's 15-hospital system in Florida once ranked as a major prize for the company. But the Tenet Shareholder Committee this year reported that state records show those hospitals losing money.
Villwock, for one, has seen Tenet misspend its money before. In its heyday, he says, Tenet spent more than $1 billion a year on capital improvements -- "a huge amount compared to the company's revenue base." However, he says, most of that money went to "sexy" profit centers like cardiology and neurosurgery while routine maintenance went heavily ignored. As a result, he says, the company still has plenty of catching up to do.
"We're still convinced that this can be a winning hospital," Sutton says. "We see the potential but nothing happening. The problem," he concludes, "is Tenet."
Tenet's Fraying Ties to Doctors The (Melissa Davis) August 23, 2005

Mar 2006 In hunkered down mode
Some local doctors question whether the Tenet hospitals are cutting staffing, leaving too few nurses to treat patients.
At one commission meeting, Dr. David Dodson, an infectious-diseases specialist who is on the Good Samaritan board of governors, said Tenet was in a "hunkered-down mode" and not looking to invest in the hospital.

"I remember the days clearly when there was no question that if there was an acute medical problem you went to Good Sam, and you got the best care, period," Dodson said at the time. "Nobody had to think about it. Now we have to think about it."

Last week, Dodson declined to elaborate, saying only: "When a corporation has financial problems, it is not surprising that it does not have as much financial resources to invest in each facility."
Tenet, which has sold 43 hospitals since 2002, acknowledges that it has "constrained" investing in hospitals to make sure it has enough cash to pay a government settlement.
Tenet CEO: We're on the way back The Palm Beach Post, Florida March 27, 2006

Doctors want hospitals updated
Gaining traction with doctors will require stepping up spending to update hospitals, managers say. Many doctors began looking elsewhere to practice on concern that Tenet's precarious situation would damp investment in the medical equipment or systems they want to use, some physicians said.
Doctors there want to ``to make up for the shortchanges in the past, when the corporate mindset was to make as much money off the status quo as they could while making as little capital investment as possible, and there was no long-range planning,'' said Michael Gidcomb, a pulmonologist who affiliated with Doctors Hospital of Dallas in 1978 and recruited other lung specialists to join him.
Tenet Healthcare Courts Doctors in Search of Financial Recovery Bloomberg News April 14, 2006

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This page created July 2007 by
Michael Wynne