Tenet Healthcare Corp. has agreed to sell two of its hospitals to the University of Southern California, ending what had been a years-long dispute between the educational institution and the hospital chain. Tenet will sell to USC the 411-bed USC University Hospital and the 60-bed USC Kenneth Norris Jr. Cancer Hospital for $275 million. Tenet will receive $245 million immediately, with the additional $30 million deferred and placed in escrow for up to four years. Tenet will retain the hospitals’ working capital of approximately $35 million. USC has agreed to offer employment to virtually all of the hospitals’ current 1,600 employees. USC, Tenet and Tenet’s predecessor company, National Medical Enterprises, had worked in partnership since the mid-1980s to operate the hospitals. However, Tenet endured serious financial and public image difficulties earlier in the decade related to inflated charges its
hospitals had submitted to the Medicare program. Settling the issue cost Tenet some $900 million in fines and refunded payments. USC sued Tenet in August 2006, claiming Tenet’s financial status had forced it to pare back some $100 million in
capital improvements for the hospitals, and was harming the reputation of USC’s physicians. Tenet agreed in principle last April to sell the facilities. USC University lost $7.7 million in 2006, according to the most recent data from the Office of State Hospital Planning and Development. USC
Norris earned $4.95 million during that same period.
USC officials say they will use the acquisitions to create an integrated academic medical center “elevating the Keck School of Medicine of USC to a nationally acclaimed leader among the nation’s medical schools,” says USC President Steven B. Sample.
The sale removes Tenet from the Los Angeles area altogether.
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Tenet Sells Two Hospitals to USC$275 million deal settles three years of litigation
PAYERS & PROVIDERSCalifornia Edition
USC-University Hospital is the larger of the two facilities Tenet is selling.
Source: www.usc.edu
Medicare HCC Management, San Diego.
Explores how health plans and providers can optimize revenue from their Medicare partnerships. Conducted by Financial
Research Associates.
Register online: http://www.frallc.com/
National Pay forPerformance Summit. Hyatt Regency, San
Francisco.
A leading forum on P4P,transparency and value-driven healthcare with keynotes on post-election issues and
payment reform.
Register online:
www.PFPSummit.com, or www.iha.org.
April 25
April 23
Calendar
19 April 2009
April 26-28
American TelemedicineAssociation -- 14th Annual InternationalMeeting and Exposition. Rio All-Suites
Hotel, Las Vegas.
The meeting focusesexclusively on telemedicine.
Info:
http://www.americantelemed.org/i4a/
April 30-May 1
American Association ofMedical Audit Specialists. HyattTech Center, Denver
Current healthcare issues will be examined at the 2009 conference for the only credentialing agent for medical
A ballot proposition that would prove a fiscal boost to California’s children’s hospitals appears headed to victory on Nov. 4, as it has strong poll numbers and no apparent opposition. If passed by a majority of voters, Proposition 3 would provide $980 million in bond money to the state’s 13 children’s hospitals, primarily for rebuilding, remodeling or upgrading existing equipment. Under the measure, the five children’s hospitals operated by the University of California in Los Angeles, Irvine, Davis, San Diego and San Francisco would receive $39 million apiece. The eight other campuses – which include Childrens Hospital Los Angeles, Childrens Hospital Orange County and Lucile Salter Packard Children’s Hospital – would receive $98 million apiece. The differential is due to the fact the private facilities treat far larger numbers of Medi-Cal and uninsured patients, according to Diana S. Dooley, president of the California Children’s Hospital Association. The money could be used for new construction, such as expansions of inpatient and outpatient facilities; and the purchase of new medical equipment. A Field Poll conducted in September found that the proposition had the support of 47% of registered voters, with
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35% not supporting it and 18% undecided. Dooley says her internal polling numbers are similar to Proposition 61, which passed with 58% voter approval in 2004. It raised $750 million in bonds for the state’s children’s hospitals. Despite a decidedly chillier economic climate than four years ago, Dooley believes voters will be generous with Proposition 3 anyway. “Even in tough times, we have to make investments in the future,” she says, adding that a defeat of the measure will make it far more expensive for her organization’s member
hospitals to address ongoing infrastructure issues. According to Dooley, the hospitals have
already used up much of what was raised through Proposition 61, mostly because of rapidly rising construction costs. Studies by the RAND Corp. and the Hospital Association of Southern California conclude that higher overseas demand for building materials and a reluctance for building
contractors to engage in the complexity of healthcare
construction has driven new hospital building to close to $2 million per bed, more than double the cost of a decade ago. Dooley says Proposition 3 has some mild opposition from anti-tax groups, but they will not be actively campaigning against the measure.
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AD 1.75” x 1.25”Proposition 3 Runs Well In Polls
Organized Opposition Sits Out Campaign
47%35%
18%
Yes No UndecidedProposition 3 Polling
Source: Field Poll
NEWS
In Brief
Ninth Circuit Nixes Medi-Cal Payment Cuts
The U.S. Ninth Circuit Court of Appeals has ordered the Medi-Cal program to stop its planned 5% reduction in hospital payments. The court ruled that California health officials and lawmakers lowered the payments without considering the effects on quality of care, the economy or low-income residents' access to health services. A unilateral cut under such circumstances violates federal law. The California Hospital Association estimated that such a cut would have cost facilities about $200 million a year for indigent care.
Anthem Direct Patient Payments Under Fire
Anthem Blue Cross is being criticized by providers for directly reimbursing patients for costs incurred from out-of-network care. The practice, known as “member direct pay,” has been growing since the number of hospitals that have terminated their contracts with Anthem have grown. Anthem officials say it better educates members about the cost of the care they receive out-of-network. Providers have criticized such direct payments because it unilaterally gives Anthem power to determine what it will pay for out-of-network services. It also places an addition burden on hospitals to collect payments from patients, who may have already spent the funds. According to published reports, at least nine hospitals in Southern California have had patients who were directly reimbursed.
UCI Medical Center in Orange opened up the first phase in its $555.9 million reconstruction earlier this month, putting a fresh face on an institution that has been rocked by three scandals dating back to the mid-1990s. The hospital transferred all but its ICU and oncology patients to the new seven-story, 191-bed wing over the weekend of March 7. “Everybody on staff is enthusiastic about the new building,” says UCI Medical Center spokesman John Murray. Another 45 beds will be added between now and 2011. The facility, which was built to ensure UCI complies with seismic safety laws enacted after the Northridge earthquake, is expected to relieve significant crowding at the old facility, which was built in 1961. The new structure includes 280-square-foot private patient rooms, replacing 350-square-foot rooms that had been housing up to four patients. There are also 15 new 625-square-foot operating rooms, replacing the previous 11 ORs, which were about half the size. “We were bursting at the seams with the previous ORs,” Murray says. UCI will also be able to greatly expand its medical research. Along with
a new research lab slated to open in 2011, six beds in the new facility have been set aside as part of the new Institute for Clinical and Translational Studies. It will conduct research using data that is difficult to obtain from other than hospital inpatients. “If someone is testing a new chemotherapy protocol that requires constant blood monitoring, it can be done here,” Murray says. The revamped hospital is being marketed with nearby roadside “A New Era” with
roadside banners. In 1995, UCI came under a firestorm of criticism after it was reported that its fertility doctors had stolen patient eggs and implanted them into other women without notifying them. Just four years later, reports surfaced that the hospital’s Willed Body
program was selling body parts. In 2005, it was revealed that more than 30 patients awaiting liver transplants had died, even as the hospital passed on potential donor organs. Murray suggested that the revamped facility would not only improve UCI’s image in the community, but that it is also moving away from being perceived as Orange County’s hospital for the indigent. According to late 2008 data from the Office of Statewide Health Planning and Development, only 19% of the county’s indigent patients were treated at UCI, Murray says.
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New UCI Hospital Opens DoorsHopes High To Revamp Long-Troubled Institution
Payers & Providers
UCI Medical Center recently opened up the first phase of a $555.9 million rebuild. Source: UCI
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NEWS
In Brief
Nursing Home Operator Settles Class-Action Suit
Skilled Healthcare Group, Inc. has agreed to settle a federal class-action lawsuit claiming that the Foothill Ranch-based nursing home operator and its affiliates in California and Texas punished employees who spoke Spanish while on the job. According to the lawsuit filed by the U.S. Equal Employment Opportunity Commission, Skilled Healthcare punished employees who spoke Spanish to Spanish-speaking paients, or even spoke the language on their workbreaks. Employees who spoke Tagalog and other languages during work were not disciplined. The employees will receive at least $450,000, free English-language classes, and other forms of relief. Skilled Healthcare officials denied the allegations, but chose to settle the suit to avoid a costly trial.
CHA Investigating Fee To Up Medi-Cal Payments
The California Hospital Association is investigating the possibility of levying a fee on its membership to help boost Medicaid matching funds it received from the federal government. The CHA Board of Trustees is examining the possibility of imposing $1.8 billion in fees to paid to the state government, which would boost federal Medicaid matching funds by $3.6 billion. The state’s hospitals lost $3.8 billion last year on patients enrolled in Medi-Cal. “This proposal...would reduce the cost-shift that results from the underfunding of the Medi-Cal program, without increasingtaxes to the public,” says CHA President C. Duann Dauner.
John McCain and Barack Obama haven’t been talking much about healthcare. In the era of a 24-hour news-cycle, chatter about co-payments and deductibles doesn’t make compelling coverage.
Healthcare is the single most important issue of this historic election. Americans are aging, becoming more obese, and suffering chronic diseases such as diabetes and asthma in greater numbers. Meanwhile, 47 million go without health insurance, a figure that rises every day.
As a result, there is a lot of quiet desperation going on in America’s households. Many wonder when the other shoe is going to drop, and if they’ll be cared for should it land hard on their heads.
Although Sens. Obama and McCain do not discuss healthcare much on the campaign trail, both have very specific – and different – platforms on this issue. Obama’s is more driven by the actions of government; McCain’s by the market.
Sen. Obama’s plan would essentially guarantee coverage for every American, while avoiding the kind of institutional shakeups that Bill and Hillary Clinton’s plan had promised in the 1990s. Everyone with private insurance, enrolled in Medicare or Medicaid would keep their coverage. A new public health plan would be created, at an estimated cost of $65 billion per year. It would be funded by rolling back the Bush Administration’s tax cuts to those earning more than $250,000 a year.
Obama’s plan is similar to proposals made by Harvard healthcare economist David Cutler in his 2005 book, Your Money or Your Life, in which he lamented that universal coverage could have been achieved in lieu of the Bush tax cuts. Cutler is an advisor to the Obama campaign.
Sen. McCain’s proposals are patterned after the approaches of the Bush Administration. The bulwark of McCain’s
proposal is to allow health insurers to conduct business across state lines, the rationale being that this would increase competition and thereby reduce costs to consumers. The Bush Administration made a similar proposal to deregulate and promote “association health plans” as a way of lowering costs for smaller employers. It died a quick death in a
Congress that had been heavily lobbied by the insurance industry. Sen. McCain has also promised a tax rebate of up to $5,000 per family to purchase healthcare coverage. This sounds generous, but a recent survey by the Kaiser Family Foundation found that the average health insurance plan for a family now costs more than $12,000 per year. Sen.
McCain has not discussed how this rebate would be financed.
Both candidates have promised to make health plans fully portable, and to promote greater transparency to keep prices down.
Neither candidate’s plan is perfect. Not unlike his remarkable political ascent, Sen. Obama’s proposal is based on broad concepts while much is lacking in detail. However, it does ambitiously confront many of the ills of the current healthcare system.
Although Sen. McCain’s plan may insure more Americans, it will do little to address the magnitude of the increasing numbers of uninsured or the current Administration’s under-funding of politically popular programs such as the Childrens’ Health Insurance Plan.
If ever there was a time for Americans to send a message to fix our broken health care system, this is it. Voters would therefore do well to include healthcare in their mix of issues when selecting our next president.
OPINION
Candidates Far Apart On ReformObama’s proposal lacks detail; McCain’s, coverage
Jim Lott
Jim Lott is Executive Vice President of the Hospital Association of Southern California. He is a member of the Payers & Providers Editorial Board.
Vol. 1, Issue 1
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