Background--The USA--Australia--Business Practices--Mayne--Conclusion--References
INTRODUCTION TO THIS WWW PAGE
This page links to the bulk of the material dealing with Columbia/HCA.
Columbia/HCA was formed by the merger of Columbia Healthcare and Hospital Corporation of America (HCA) in 1994.
HCA was one of the original health care corporations formed in the 1960's by the medical and political Frist family. It had indulged in practices not dissimilar to Tenet/NME's in its specialty hospitals and had paid a fraud settlement in Texas in 1993/4.
Columbia was founded in 1988. Its chairman was the the lawyer Richard Scott. He had no prior experience in hospital administration. Columbia embarked on a program of rapid expansion and in less than 10 years it had grown by acquisitions and mergers from 3 hospitals to a mighty empire of over 350 hospitals. It merged with HCA in 1994.
With Scott as chairman and Thomas Frist as his deputy the company modeled itself on McDonald's and Walmart. The darling of the stock market it alienated almost everyone else by its aggressive business practices and the way it attacked and then took over not for profit community hospitals. It became the PACMAN of the marketplace.
Whistle blowers had commenced Qui Tam court actions against HCA in 1993 and the FBI had been investigating since that time. In 1997 US government agents swept through Columbia/HCA's hospitals across the USA on multiple occasions. A massive fraud investigation was commenced. After 10 years of wading through vast amounts of paper the company pleaded guilty to criminal conduct and paid out US $1.7 billion in civil and criminal settlements by 2003.
Columbia/HCA attempted to enter Australia in February 1997 but there were objections from citizens and doctors went to the USA to investigate. When the FBI raided its hospitals in March 1997 it abandoned the attempt.
Analysis of the press reports and statements by those involved gives an excellent insight into the operation of the health care marketplace.
Update 2004 to 2007:- By 2004 the company now called simply HCA had reclaimed its reputation but its practices were still entirely market focused and this credibility proved to be temporary. Like Tenet it was soon in trouble for gouging the uninsured. When this was stopped its performance continued to decline. There are allegations of serious understaffing and of consequences for the care of patients. Doctors were in short supply. It was soon involved in a situation similar to that at Tenet's Redding hospital. The HCA hospital had appointed a "physician" who was clearly untrained and incompetent. It allowed him to carry out surgical procedures. One hundred and twenty lawsuits followed.
There was a great deal of comment about the sale of large numbers of shares by insiders in 2005 shortly before the share price tumbled. One of those who sold all his shares was Bill Frist, republican leader in the senate. He had presidential ambitions but dropped these after the adverse publicity.
Things were no better in 2006 and the company eventually sold itself to a consortium of private equity investors. Whether they will introduce more marketplace "efficiencies' to make it profitable or simply strip it of its assets remains to be seen.
These years give an interesting insight into the way large corporate entities behave when under pressure.
Click Here to go to this update page if you have already read the other Columbia/HCA pages
Three web pages describe Columbia/HCA's activities. They give a broad view of Columbia/HCA's unsavoury conduct. Many of their unethical and antisocial practices were legal. The fraud investigations unearthed additional material. Each page describes the conduct as understood at particular times and there is inevitable overlap. Part 3 was written after the fraud had been resolved in 2003. HCA finally paid US $1.7 billion but no one went to prison.
COLUMBIA/HCA OVERVIEW - Part one: The Rise
This page describes Columbia/HCA's history as it became the largest and most successful hospital chain in the world. Its disturbing practices and the anger which they engendered are described.
HERE -- for "The Rise and Fall" Part
1 of the Columbia/HCA story.
COLUMBIA/HCA OVERVIEW - Part two:
The Fraud Investigation
This page tells the second part of the Columbia/HCA saga. The story of the government investigation and prosecution of Columbia/HCA after the FBI raids in July 1997. It describes the allegations made.
HERE -- for "The Fraud Investigation"
Part 2 of the Columbia/HCA story
Columbia/HCA Overview - Part three: Fraud, Settlements and Recovery
This page examines the 10 year investigation, its problems, the role of whistle blowers, its outcome, the criminal guilty plea, the US $1.7 billion settlement and the company's recovery under its new name HCA. It looks at Olsten and KPMG who played a part in the fraud.
CLICK HERE -- for "Fraud, Settlements and Recovery" Part 3 of the Columbia/HCA story
Columbia/HCA :: Patient Care
There were many hotly denied allegations that Columbia/HCA's cost cutting and understaffing compromised care. This page looks at a few of the reports about this.
CLICK HERE -- for more about staffing and patient care
Richard Scott & Thomas Frist :: Columbia/HCA Leaders and Culture
This page examines the conflicting personalities of Thomas Frist and Richard Scott and the different sort of cultures which their stewardship gave rise to. It is illustrated by quotes from the press.
CLICK HERE -- for more about Scott, Frist and culture
When Columbia/HCA attempted to enter Australia promising a $1 billion investment I opposed them writing many letters and sending documents and reviews to politicians and others. I gathered information, documents and television programs from contacts in the USA, and forwarded copies to the FIRB, to states, and to politicians. After Columbia/HCA had gone I used further exposures of its conduct to drive the messages opposing corporate medicine in Australia. I subsequently put some of this material on to the web site. This material make the argument against corporate care. They were written to be read independently so there is inevitably some duplication.
Columbia/HCA attempted to enter Australia in February 1997. I rapidly collected a large amount of information and made it available to the Foreign Investment and Review Board (FIRB), to politicians and to other interested bodies. The FIRB has to approve foreign investment.
At the request of a politician I wrote out a detailed argument against Columbia/HCA describing its practices. When the FBI raided Columbia/HCA hospitals on 19 March 1997 I added that information and then posted it. Columbia/HCA abandoned its attempt to enter Australia. I turned this document into a series of web pages and put them on the site. Parts were done is some haste. I have done a small amount of editing.
THE ENTRY OF COLUMBIA/HCA INTO AUSTRALIA"
Submission 31 March 1997
Australia still looked at corporate medical fraud as a number of isolated bad eggs in the corporate marketplace. This sounds ridiculous today after Enron, World.com, HIH and a host of other scandals but at this time it was a real issue and the ideologists in Canberra were in denial. The thrust of this submission is to challenge this denial by showing that the corporate thinking and the processes responsible for what had happened were society wide, health care wide, and Australia wide.
This review deliberately addresses the application of economic rationalist marketplace principles to health care on an unregulated "level playing field". It addresses the extent of health care fraud in the USA. The activities of NME (now Tenet Healthcare), GSI (France) and Mayne Nickless (Australia) in addition to Columbia/HCA. These are all described to show the consequences of driving a humanitarian endeavour such as health care with market forces. The consequences for what was once the province of ethical and caring professionals are revealed.
One of the major difficulties is that politicians and regulatory authorities will think only in terms of the particular instance with which they are confronted. They all work in the short term.
If we are to develop a health system which provides the best possible services in the most human way within the resources which society and its members are prepared to provide then it is essential that we step back. We must examine the many individual instances and develop concepts and practical perspectives which will allow us grasp the essentials of the whole problem and plan intelligently.
This review was written in March 1997 and the information about the first FBI raids on facilities in El Paso, Texas were added at the last minute. The FBI raids on Columbia/HCA facilities across the USA in July and the massive fraud investigation which is now in progress are referred to in later documents.
This page contains the theoretical background section. It is an analysis of the impact of economic ideology, globalisation and corporatisation on health care. This review addresses the progressive failure in the process of "Social Control" under the pressure of these changes and the impact this has on health care. This is not dealt with elsewhere on these pages and the implications extend wide of health care.
Part 2 Health
care in the USA
This page is part 2 of my review of Columbia/HCA. It describes the situation in the US Health Care marketplace. It includes many quotes. At this stage in Australia the marketplace could do no wrong. In this review I am trying to show that it is the marketplace itself which is the problem.
Corporate Medicine in Australia
This page describes the enthusiastic way the economic model of health care was being adopted in Australia in 1997. Politicians and the marketplace were welcoming Columbia/HCA into Australia. Economic ideology and policy was driving ahead and opposition was not credible.
Part 4 :
Columbia /HCA's Business Practices
This page describes Columbia/HCA's practices at the time of its first raid in greater detail than in part 1 of the overview. I had already written the entire submission when I received a large number of reports surrounding the FBI's first raid. Some were reports that had been kept under wraps until the raid. The newspapers had performed their own investigations earlier, alerted authorities and had been working with them. I had undertaken to have this finished within a day of so so this material was added in some haste. It is not as well written and there is some repetition. I have elected not to change this.
Part 5 : Mayne
Nickless in Australia
It has been repeatedly asserted that Australia is different and that these things could not happen here. It has been a process of beating down the doors of progressive denial in Australia. First it was only a few of Tenet/NME's psychiatric hospitals in Texas, then only Tenet Psychiatric Hospitals, then only Tenet/NME and finally only in the US. To push enlightenment further I included this section addressing the past record and current business practices of Australia's largest corporate provider of health care. I was not suggesting that their practices in health care have been or are illegal but that their patterns of thought and behaviour closely approximated that of the US corporations. The same things could happen here.
Part 6 :
Some conclusions about the threat posed to the Australian system by Columbia/HCA, concerns about the application of marketplace forces in health care and concerns about the fundamental contradictions in economic rationalist theory. In this section I go back to the wider societal issues I raised in the Background Page and draw them together again.
Part 7 : References - - - - (best to open in a separate window)List of the bundles of documents I had been sending around Australia between the announcement that Columbia/HCA was entering Australia and the completion of the submission.
A group of doctors from a community hospital in South Australia, which Columbia/HCA had targeted went to the USA to have a look. They came back and advised against the sale of their hospital. Within days of the first FBI raid in March 1997 the company abandoned its attempt to enter Australia. This was a major achievement and a narrow escape.
PAPER: Corporate Medicine: I told you so - an assessment of corporate practices - 19 July 1997
Six months later after a second and much larger series of raids on Columbia/HCA hospitals on 16 July 1997 I wrote an assessment of corporate practices using Columbia/HCA but generalising it by including others. Sun Healthcare had announced its entry into Australia and I was objecting but at that time I had limited information about it. I collected material from recent press reports to once again say "look I told you so but you wouldn't listen". This reaffirmed the accuracy of what I had been saying. I was building credibility. I added recent material about Tenet/NME, Kaiser Healthcare and managed care in order to show that this was a world wide corporate marketplace problem. I set out the implications and drew conclusions. I then described similar behaviour in Australian medical and nonmedical corporate activities to show how vulnerable we were.
HERE -- to go to "I told you so"
Submission: Corporate Medicine - Hospital licenses: Revising the regulations
In August 1997 Thomas Frist replaced Richard Scott as chairman and did a mea culpa effectively acknowledging Columbia/HCA's disturbing business practices and promising to reform the company. The practices he acknowledged were those I had been writing about. Queensland was revising its hospital licensing regulations and I seized the opportunity to make a submission using these acknowledgments to press for regulations which would prohibit these business practices. The page describes some of these Columbia/HCA issues but also other matters. The state government was aggressively pursuing its policy of contracting public care to private providers. The submission had no impact.
CLICK HERE -- to go to "Hospital licenses
HCA : 2004 to 2007
This web page takes the story of HCA through the price gouging scandal in 2005. It follows it through allegations of staffing problems and poor care, then to allegations of insider trading before the shares plunged, and finally its sale to a private equity consortium in 2006. This page is revealing of corporate behaviour when under pressure.
CLICK HERE go to this web page