Hospital Corporation of America: A Look Inside the Healthcare Giant

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Hospital Corporation of America (HCA) is a for-profit, Tennessee-based medical giant that owns an impressive 165 hospitals and 115 freestanding surgery centers with around 215,000 employees in the United States and United Kingdom. HCA is the largest medical corporation in the entire world, but like almost any other business, its beginnings were humble.

HCA was originally operated out of a home with just a handful of original founders. It took a few years, but the corporation experienced a growth spurt where it began making consistent progress and acquired a good number of hospitals. HCA’s growth eventually skyrocketed amidst mergers, buyouts and management agreements, turning them into the impressive mega corporation that they are today.

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Financial Woes and Questionable Trading

One drawback to being a healthcare giant is the amount of scrutiny that it attracts. There’s no doubt that many large healthcare companies have been caught abusing the system, collecting fees for services and procedures that weren’t provided to the patient or billing in forceful ways in order to boost profits.

Likewise, it is well known that smaller companies have abused the system as well, but due to their size, they were able to stay below the radar and either avoid serious national exposure or avoid getting caught altogether.

In 1997, after accusations and subsequent raids, HCA admitted to fourteen felonies that included abusive billing behaviors with Medicare and other insurance companies by exaggerating the severity of patients’ illnesses as well as paying kickbacks for referrals. Some doctors received luxuries such as sums of cash, rent-free homes and free pharmaceutical drugs.

Documents were even falsified regarding the use of space in the facilities. HCA settled with the government for about $2 billion, the largest settlement of its kind in history. HCA’s CEO at the time, Rick Scott, was not brought up on any charges; however, he was forced to step down from his position.

Scott was then paid a settlement of nearly $10 million along with 10 million stock shares – some of which came from his own early investments.

Another scandal erupted in 2005 when Bill Frist, son of one of the original founders of HCA, and a few other executives sold all of the shares they had in the company. Two weeks later, HCA’s stock took a 9-point nosedive.

Shareholders believed HCA made false reports regarding its profits and sued 11 different senior officers for insider trading. HCA settled the suit for $20 million.

 

Profits Soar Even Amid the Great Recession

Because of some of its history, plenty of medical professionals have taken a dislike to HCA as a whole; however, with their finger on the pulse of the healthcare industry, not even recession could slow its growth. The bigger the corporation, the more negotiating power it has, which has clearly been a great asset for HCA.

In the first quarter of 2009, HCA saw an increase of about $100 million due to adopting a new way of coding.

The corporation, which used to trail the rest of the industry in certain high-cost billing categories, suddenly took a leap to the top. Executives of HCA claimed that the newer charges brought the patients in line with the services they were receiving.

From 2006 to 2010, the number of reimbursements received from Medicare for patients that were classified in the two highest categories for reimbursement went from less than the industry standard of 58 percent all the way to 76 percent.

To put that in perspective, one California HCA hospital’s Medicare reimbursements skyrocketed from $48,000 to $949,000 in a matter of four years. Executives at HCA said that they were aware of the backlash from the new system and said that they had made the proper changes; however, the next quarterly report was oddly similar.

 

Insufficient Staffing

medical-billing-advocate_175670765Another way HCA has been able to profit while saving money was by the implementation of a staffing program that relied on estimating the number of patients each hospital would have daily, and adjusting the staffing levels accordingly.

When interviewed, though, quite a few staff members expressed concerns about the lack of adequate coverage in pressing areas of the hospital such as the ER and ICU due to this staffing system, which they deemed inefficient.

One of the biggest concerns with staffing was the frequent occurrence of bedsores among immobile patients. Regulators and patients, as well as families, have come against HCA for the high number of bedsore incidents in their hospitals, and staffing issues were believed to be one of the main contributors.

Experts say that there is definitely a link connecting bedsores and staffing quality. Of the 15 worst hospitals for patients acquiring bedsores, eight of them are HCA facilities.

 

Selective Treatment

The term “emergency” is used loosely in many hospitals. Some patients use the emergency room for ailments much less severe than what is considered an actual emergency by healthcare professionals such as simple colds or sore throats. HCA came up with a solution – however controversial it may be.

They have taken a stand against treating non-emergency patients in their emergency room unless the patient can pay their out-of-pocket costs upfront. This change was intended to cut costs and reduce crowding in the emergency room, making way for actual emergencies (or at least people who could pay their bill).

A spokesman for HCA said that in one year, 80,000 patients who came in for emergency care ended up leaving and either “sticking it out” or going to another facility.

So, how big do you have to be before you can turn away business? Because of the coding changes, HCA’s emergency rooms have more than made up for any money lost due to turning those away with less than emergency situations.

Furthermore, emergency rooms are often the beginning of non-paying or under-paying accounts, and speaking solely from a financial standpoint, they can cost more to operate than they receive in payments due to the number of non-payment accounts or incomplete reimbursements.

With all that time and effort spent on training, triage, and turning patients away, it may be worth asking why some HCA facilities are using roadside digital billboards that display emergency room waiting times to seemingly lure patients in.

There are also phone numbers patients can text and applications they can download to their electronic devices that will show what the current wait times are. Maybe the hospitals are hoping only the real emergencies will show up, or perhaps they want to get as many through the door as possible (even if they have to turn some away) in order to have a better shot at getting actual paying patients.

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Billboard Showing “Wait times”

 

Ethics

Some of the doctors at these hospitals have found it necessary to override the system in order to treat patients to the degree that they feel the patient needs to be treated. Due to their triage system, one patient was sent away from the emergency room after coming in complaining of painful breathing.

The patient left and went to a non-HCA facility where they were diagnosed with pneumonia. The hospital was cited for failing “to ensure that an appropriate medical screening examination was conducted.” This is not the only case where HCA refused immediate care when they shouldn’t have, and other cases have resulted in much more dire consequences.

Many of the professionals working in various HCA facilities express concern, stating that while HCA is getting bigger and their profits are growing, the patients are suffering as a result. However, HCA claims that the vast majority of its hospitals are among the top 10 in the United States for federal quality measures.

Ethics shouldn’t be completely ruled out, though. Although HCA has some of the highest paid executives in the industry (former CEO Richard Bracken earned $46.3 million and $38.6 million in 2012 and 2013 respectively), some of its money is being used for notable and charitable causes.

For instance, in a single year, they allotted about $2.5 billion for charity care – a program that provides financial assistance for healthcare to those who qualify. Officials claim that the harsh scrutiny of HCA’s use of funds is unfairly judged and that smaller, nonprofits wouldn’t be inspected so harshly.

Filed under: Resources, MBAA Education Center, Hospital Corporation of America

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