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Tenet Healthcare and its Doctors Introductory
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Tenet was accused of organising an illegal price fixing contract with a group of doctors for the purpose of negotiating with insurers in North Carolina. It was settled without penalty or guilty pleas by terminating the contract and accepting conditions.
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Every attempt is made to provide accurate and well written material. Your contributions, suggestions, additional information and advice sent to the web address at the foot of the page are welcome. Where possible they will be included in revised pages.
The intention is to show the general thrust of corporate practices as well as the nature and extent of any allegations made. Material contained here represents my views based on my study of the operation of the health care marketplace and the material available to me. It should not be assumed to represent the views of any other individual or organization.
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The series:- Tenet and its
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
In a managed care type of market system, competition is used with the intention of driving prices down. While lip service is provided to care the standard of care that will be given actually plays little role in this. The most successful financially are those who find some means of avoiding competition or influencing it by securing leverage so that they can negotiate higher prices. In Australia for example Ramsay and Healthscope prospered by buying specialist or country hospitals where there were no nearby competitors. They were able to dictate their charges. In contrast competitors owning hospitals in cities where there were competitors could be forced to tender below costs. They were then under strong pressure to compromise on care in order to survive.
In the USA and to a lesser extent in Australia doctors are caught up in similar contracting arrangements. In both countries individual hospitals and doctors may be at a considerable disadvantage when negotiating with wealthy and powerful insurers who operate across the country and are in a position to dictate payments. As in the case of kickbacks the laws defining when a particular arrangement is considered collusive and anticompetitive can become complex and confusing.
The argument is that the ruthless market system and its competitive basis is an inappropriate mechanism for the vulnerable health and aged care sectors. Determining payment based on competition and economic muscle puts strong pressure on the adequacy of care.
Many of the accusations against Tenet and its hospitals relate to its dealings with doctors. The case of Tenet, Frye Regional Medical Center, and the 450 doctor Piedmont Health Alliance is probably illustrative of some of Tenets dealings with doctors.
It should be noted that the arrangement was set up in 1993 and 1994, a time when Tenet was negotiating a $379 million criminal settlement involving allegedly illegal arrangements with its doctors. It was loudly proclaiming that it had reformed.
Tenet Healthcare (THC), one of its hospitals, and a group of doctors have reached a deal with the Federal Trade Commission to settle charges of illegal price fixing. Regulators say the doctors` group, Piedmont Health Alliance, effectively eliminated competition among physicians in four counties in North Carolina, and that Tenet helped set up the group. The deal bars Tenet from entering into agreements among doctors in that area, and orders it to stop receiving payments based on the price-fixing scheme. Tenet says the settlement is not an admission that it broke the law, but a decision made in the best interest of the company, Jeff?
Nightly Business Report (Federal Document Clearing House) December 24, 2003
The Federal Trade Commission has settled its lawsuit accusing Tenet Healthcare Corp. and one of its North Carolina hospitals of playing a central role in an illegal price-fixing arrangement with a physician-hospital organization. In the Matter of Tenet Healthcare Corp. et al., No. 9314, settlement reached (F.T.C., 12/24/2003).
In an administrative complaint, the FTC claimed that Piedmont and 10 individual doctors collectively set the prices it demanded for physician services from payors, thereby eliminating competition among these physicians in the area.
The agency charges that the physician members signed agreements that bound them to participate in all contracts the group entered and to accept Piedmont-negotiated prices.
The FTC maintained that Frye was "instrumental" in Piedmont's "formation, expansion and operation." It specifically claimed that a Frye representative on the Piedmont board participated in actions regarding payor contracts and physician fees.
Tenet Hospital Settles Price-Fixing Case Antitrust Litigation Reporter January 19, 2004
The agreement imposed no fines and does not contain an admission of wrongdoing by the physician-hospital organization or the physicians.
Two not-for-profit hospitals that joined the alliance in 1996 were never charged in the case.
Alvis said the alliance will focus on expanding its technology program to increase the use of electronic medical records in the offices of its roughly 450 physicians
N.C. PHO, doctors settle FTC probe Modern Healthcare August 11, 2004
FTC officials say Piedmont used its contracting method with at least two health plans, Cigna HealthCare and United HealthCare.
In December, the FTC filed a complaint against Piedmont and 10 member physicians who led its collective agreements.
The settlement, disclosed Wednesday, averted a hearing before a federal administrative law judge scheduled for this week. The settlement is open for public comment for 30 days before the FTC makes the order final.
Piedmont Health Alliance settles with FTC The Charlotte Observer August 12, 2004
In 1993, Frye's Chief Executive Officer ("CEO") developed a plan for a PHO that would include Frye and the physicians practicing at Frye. He hired a consultant to survey the physicians regarding what they would expect from a PHO. The consultant reported that the physicians "stated a need to form the group to negotiate with group clout and power" and "maintain their income" in anticipation of the arrival of managed care organizations in the Unifour area. Frye's CEO and Chief Operating Officer, along with eight physicians practicing at Frye, formed a steering committee responsible for establishing and organizing the PHO.
PHA was established in 1994 to facilitate physician collective bargaining with payors and obtain more favorable fees and other terms than PHA's physician members could obtain by dealing individually with payors. PHA established a Contracts Committee to negotiate contracts with payors on behalf of PHA's physician members, subject to approval by PHA's Board of Directors. In 1996, PHA expanded to include Caldwell Memorial and Grace, both nonprofit hospitals, and their respective medical staffs.
Since 1994, the Board voted to approve more than 50 contracts containing physician fee schedules that PHA collectively negotiated with payors.
PHA hired actuaries and other consultants to develop physician fee schedules containing price terms that PHA demanded from payors as a condition of contracting with PHA for physician services. - - - - - - - Payors that failed to accede to PHA on price and other contract terms were denied access to PHA's physician members for inclusion in the payors' provider networks.
In 2001, PHA prospectively adopted a new contracting method that it called a "modified messenger model."
The complaint alleges that, in setting up the "modified messenger model," PHA physician members reported to PHA the minimum price terms- i.e., standing offers or "targets"-each would accept if offered by a payor. To help the physicians set their individual target fees, PHA provided each practice group with specific information about the fees that practice was receiving from several payors under existing PHA-negotiated payor contracts. PHA's physicians used these previously fixed prices in determining the prices to demand under contracts processed under PHA's new contracting method.
To compel the payor to accept PHA's terms, PHA confronted each payor with actual or threatened contract termination, and thus loss of its provider network, during the negotiation process. Once aggregate payment levels and terms were determined, PHA had its actuary develop fee schedules to be used under each contract. This determined how much each PHA physician would receive for specific medical procedures-in effect, dividing the "pie" that was the negotiated aggregate reimbursement amount. Only after the payor agreed to both the aggregate payment level and the fee schedule did PHA determine which physician practices "matched" the payor's "offer" and thus would be included in the payor's provider network under the PHA contract.
By facilitating agreements among PHA member physicians to deal only on collectively-determined terms, and through PHA's and its members' actual or threatened refusals to deal with health plans that would not meet those terms, PHA and the Physician Respondents are alleged to have violated Section 5 of the FTC Act. PHA's collective negotiation of fees and other competitively significant terms of dealing has not been, and is not, reasonably necessary to achieving any efficiency-enhancing integration.
Piedmont Health Alliance, Inc., et al.; Analysis To Aid Public Comment Federal Register August 25, 2004
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