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August 2000

(In 2000 the document from which this page was developed was sent to many of those responsible for making health care decisons in Australia. Copies of the articles referred to were also sent.)

This page contains an overview with critical comment of 141 articles, the majority published in the 3-4 months before August 2000. There was a vast quantity of recent additional information confirming what had been happening in the health care marketplace. Included were a few older articles to create context.

This page and the "Analysis of corporate health culture" using Sun Healthcare as an example were written concurrently and relate to one another.


Main Points
















MAIN POINTS -- contents

1. Dramatic new investigations across the USA show that for profit hospitals are not only more expensive but provide inferior care. A new Federal investigation identifies understaffing as the major problem. For profit hospitals are shown to be understaffed when compared with not for profit hospitals. New investigations show the situation in nursing homes is far worse. This reinforces the Australian experience of profit driven nursing homes

2. The primary problem is shown to be the diversion of human and financial resources from the care of patients to the business of the market - ie care of the corporation. This is what Ron Williams predicted in his book "Remission Impossible" in 1992.

3. Almost every sector of the corporate marketplace is in serious financial trouble with actual or threatened bankruptcies, is facing or has faced major fraud investigations, and is being pursued through the courts by a vengeful and angry community. Market theory may be working itself out but at enormous financial and human cost.

4. The largest and previously most financially successful corporate chains are most at fault in all areas of concern. They are the subject of the community's anger.

5. In contrast the not for profit groups and the much larger number of "Mom and Pop" nursing homes which have simply got on with the business of looking after citizens who needed care, using the resources available to them have remained viable. They have not peppered the pages of newspapers with gruesome stories of misused humanity and financial failure.

6. New investigations show how severely oversight has failed and suggest that bribery and close relationships between health care businessmen and politicians are closely linked to this. This must make us ask questions about the close relations developing between corporations and politicians in Australia - and about the failures in aged care.

7. It is now clear that nursing homes were outside the restrictive DRG capitation system which operated in acute hospitals and could charge fee for service. This and not the claimed lower costs or improved patient care is what actually fuelled the boom in post acute and subacute care in the USA. As in the specialty hospitals in 1988-91 vast quantities of therapy was given, medicare was defrauded, staffing was cut and care compromised. Corporate chains rorted the system at the expense of the welfare of citizens.

8. In Australia Mayne Nickless has appointed an aggressive new CEO with a reputation for cutting the fat. Revesco, a new company is embarking on an acquisitive policy not dissimilar to the failed US chains - even promoting the same corporate version of integrated care which so successfully manipulated patients for profit. The parallels are easy to draw.

9 Revesco and other groups have set out to corporatise general practice in order to generate a network of referring centres for the pathology, radiology and ancillary medical service empires they are building. The motive is profit and profit only.

10. Sun Healthcare the dominant owner of Alpha Healthcare is selling its international operations.

11. Sun Healthcare's Andrew Turner has now been forced to resign from Sun Healthcare. He does not intend to retire from health care. There is a very strong belief in the USA that he will use his considerable financial reserves to join with others to buy and then run Sun's international operations. (My assessment is that there are few other buyers) We will get the full benefit of his disturbing operational skills in Australia.

12. Both Canadian and Australian governments seem to be deliberately running down their medicare and public hospital systems, promoting more expensive corporate care. Canadian citizens suspect a conspiracy. Could this have anything to do with commitments made by both governments to the WTO?

A. INTRODUCTION -- contents

1. A FLAWED DEBATE:- The debate about health care in Australia centres on paying for services rather than the way services are provided. My argument is that while this is important it is peripheral to the critical problems in health care. One way or another we are going to have to find the money to pay for the care of our citizens - government funded or user pays, taking more from the those who have more for those who have less. How this is done and how much we pay is a procedural matter. Much more important is how we expend and stretch the money which society decides is appropriate so that we provide the best and most equitable care possible.

The belief systems of our market society lead us to automatically equate a user pays system with the marketplace, and the marketplace with the rights of other individuals to profit from providing health care. This makes the claimed benefits of the corporate marketplace appear legitimate. This is the "associative logic" of the marketplace (so well illustrated by Graham Samuel's health care model). It is fatally flawed. By failing to think logically we fail to confront a profound moral and ethical problem at the heart of modern society and modern thinking.

2. A MORAL QUESTION:- Is it morally acceptable for one group of citizens to build their wealth, (sometimes vast wealth) and well being on the misery and misfortune of other less fortunate sections of society, nationally and globally? A survey of our citizens would I hope generate a massive negative response.

Taking financial and personal control of our own well being and health when we are able to do so is quite different from paying for someone to make vast profits out of our misfortune - even when that is paid by government. Unfortunately the really big payments come when we are not in a position to control either the expenditure or the care. In an aggressively acquisitive system we become helpless victims of the sort of corporate predators and the distorted thinking described in the articles I am reviewing.

3. THE CONSEQUENCES:-- This logical error results in a second problem in the Australian debate. The debate ignores powerful forces which impact on the care given to citizens. The debate about the provision of care in Australia is in terms of public versus private health care. This sidesteps the critical issues - issues which our establishment is reluctant to confront. The critical issue is not whether the care is provided privately or by government but whether it is provided primarily for profit and particularly for the profit of shareholders.

Television debates about health care include corporate providers and a failure to do so would draw the criticism that "key players" were being excluded. Great care is taken to protect their sensibilities and to pussy foot around this issue. To do otherwise would be considered unbalanced. They would refuse to appear and cry bias.

4. SYSTEMS OF CARE:-- There are critical differences between public national health systems, private not for profit systems, privately owned for profit systems and systems based on publicly listed companies and a corporate marketplace. I include in this material extracts from material I have placed on the www which explains the differences and the forces which are generated towards and away from care in each system. 4

That commercial pressures, particularly the corporate priorities of profit and growth , together with the pressures of commercial competition lie at the root of the major problems in providing health care can no longer be disputed. The evidence is in.

Human and economic resources are diverted from the care of citizens to the business activities involved in being competitive and generating profits for shareholders. It is not only the most costly system and the most inefficient but it is the most immoral system and seriously compromises care. When funds are limited then care (eg nursing) is rationed for the economic benefit of distant shareholders. Their personal interests are not involved and they do not know what is being done in their name.

5. THE THRUST OF THE MATERIAL:- Most of the material in the attached file addresses the critical difference between market based profit driven corporate systems of care and non corporate care driven systems. The articles reveal the consequences of a system in which market listed corporations play a dominant and controlling role. The material reveals a failure to confront and grasp fundamental problems in the provision of care in this way. Instead of identifying the powerful forces creating the problems and addressing them, attempts in the USA and Australia concentrate on regulation, monitoring, accreditation, and punishment; measures which have demonstrably failed on multiple occasions. The reasons for this lie in the dominance of economic ideology and in the close nexus between a powerful corporate establishment and a pliant political system.

6. THE DEBRIS OF THE 20TH CENTURY:- The underlying thinking which underpins the thoughtless application of broad social theories to all sectors of society has been described as the debris of the 20th century. The fallacies in this thinking are illustrated by what is happening in health care. This approach "litters" the 21st century and it will take time to collect it for garbage disposal. The irrelevance of these ideologies to individual situations and the consequent social disruption creates ever increasing discontent. This is reflected in ever stronger grass roots revolt - One Nation - the demonstrations in Alberta Canada -- the frustrated demonstrations in Seattle and at every international economic meeting. This discontent, often manifested violently and illogically is being articulated and focussed by new more rational thinkers with a deeper understanding of social process and human behaviour.

7. NEW PERSPECTIVE'S:- There is an increasing realisation that meanings, solutions and compromises lie within the context of individual situations and not in overarching social theories. Sensible thinking examines broad theory in terms of domains of relevance, limits of applicability, alternate perspective's, and the insights provided by individual situations. This line of thinking underlies a move towards a more community based system for the provision of social services and a far greater involvement of the community in the running of the country and its affairs - a devolution of decision making and implementation. It is on a collision course with current establishment theories and with the concepts which underpin current thinking about globalisation. Modern technology provides an opportunity for the community to "take back" functions which it has in the past delegated to government and in doing so make them more directly relevant to its activities.

8. MEETING THE CHALLENGE:- I see this as an evolutionary step in the see-saw democratisation of society. It is threatening to the corporate establishment and to a political system in which power is retained by marketing plausible all encompassing solutions to the electorate. A 20th century establishment which has used "fear of change" to loudly criticise those who have failed to embrace its corporate solutions is increasingly faced with mounting pressures to confront the logical deficiencies in the thinking which underpins the changes which it advocates. If globalisation is to serve humanity then there is an urgent need for change but it is the thinking in the establishment and the political system which must change, and there is no sign of this. The articles in the attached file reveal profound deficiencies in the "solutions" being offered and underscore the need for changed thinking.

9. PERSONAL PREFERENCES:- My personal preferences for a health care system is the bringing together of the public system, the not for profit system, the professional colleges and the community to develop a cooperative, non competitive community organised and based system of health and aged care. This would eliminate the adverse forces giving rise to the situations described in these articles. It would create a context directly related to health within which the applicability of theories developed elsewhere could be evaluated.

It would provide a forum within which health care integration and monitoring can be safely developed. It would allow society to address "need" and ration care equitably, while responding to reasonable "demand" for additional services and comforts. For profit care would be marginalised. Society has to decide how much it will spend on the needs of its members. A community based system would stretch this to maximum benefit, rationing equitably when required. We already have well established equitable systems for rationing scarce resources like kidneys, livers and hearts. Any profit from meeting additional demand would be returned to the community.

I favour a continuation of medicare to pay for basic need. Next to a national health system this is the most equitable and economical way to pay for care. Personal payments, medical saving accounts and insurance can be used to cover additional demand. There would be no need for the economic coercion used by the government to force younger Australians to take out private health care insurance.

10. BUT THIS IS IRRELEVANT:- My preferences and my views are not relevant to my arguments, and I do not want to be accused of criticising in order to push a personal model of care. I am not trying to promote or impose my solutions or challenge those with other insights. There are many viable alternatives. Others have equally reasonable positions and they may be more practical. I am looking at what is actually happening as a result of the current solutions and why it is happening.

The important issue is to debate health care issues with words and ideas linked directly to real events and the context of health care, rather than to imprecise and illogical abstractions from other domains such as the corporate marketplace. What is clear is that we are travelling on the wrong road and the sooner we turn back and try another the better. Once we realise this then we can debate alternatives.

11. THE SCOPE OF THE MATERIAL:- Most of the material is from the USA but I have included articles from Australia to show how relevant the events in the USA are. I have also included articles from Canada to illustrate the global nature of the issues and discredit Dr Wooldridge's recent rationalisation. He used what he claimed was the failure of the Canadian system to support his policies. We need to understand the similarity between what is happening in the USA, Canada and Australia and the role which ideology plays. The strategy is driven by multinational corporate interests operating through governments and the World Trade Organisation. I have previously supplied documents.



-- contents


An editorial in the Journal of General Internal Medicine reviews the evidence showing that the marketplace seriously compromises care. It reports on the latest carefully carried out study which "found significant advantages for patients in not-for-profit and teaching institutions." This article is very important and I have placed it at the top of the file. 1 Some paragraphs are worth quoting.

"Something is wrong in our nation's hospitals. While we are fatally injuring more people than are killed by automobiles and firearms, at a cost that is as large as caring for people with HIV/AIDS (10), hospital managers and even medical staffs appear more preoccupied with survival in the marketplace than the survival of their patients. This is a marketplace where hospitals and health plans would supposedly compete based on quality; where report cards would stimulate zealous efforts to enhance quality. Yet, the signs abound, that such report cards have failed and that the market is blind to all but the financial outcomes. (references given)"

Corporate interests continue to threaten our health system in Australia and they do so with the full support and encouragement of our governments and the international business community. The reasons why care is compromised are obvious . I quote

"Consider nurses. We need look no farther for one possible explanation of Thomas' study findings than the nurses' station down the hall. Largely invisible to researchers (I could find not a single article about the role of inpatient staff nurses in JGIM, other than deploying them to help evaluatephysicians!), nurses play a pivotal role in error detection and prevention-intercepting erroneous orders, recognizing subtle changes in patients' mental status, uncovering critical allergies, transcribing orders and administering increasingly potent medications, minute-to-minute communication with patient and family, not to mention hands-on care of every wound and orifice of increasingly sick frail patients.

One well-documented characteristic of for-profit hospitals is lower staffing and expenditures for nursing. Unfortunately, this distinction is eroding as non-for-profits and academic centers increasingly emulate the for-profits, hiring management consultants whose first job is often to implement schemesfor the down-sizing and deskilling of nursing. Absent from their financial spreadsheets are indicators of the impact of fewer experienced nurses at the bedside."

Nurses and doctors are complaining bitterly about the same thing in Australia. Our not for profit charitable institutions are also emulating the for-profits. They are corporatising, hiring management consultants, instituting similar management practices, and setting up marketing divisions.

The editorial is well referenced and it describes the difficulties in effectively monitoring standards by external methods, particularly in the marketplace - a point I have made ad nauseam. It reviews the much publicised institute of medicine study and concludes

 "To paraphrase the title of the IOM report -- to care is human. To-profit is not -- if it comes at the expense of suffering, or reaps reward from the denial of care, or even merely distracts us from our patient care improvement mission, it should be considered malpractice."

Another article from a group of physicians pressing for a National Health program similar to that in Canada is titled "Medical Errors Higher at For-Profit than Not-for-Profit Hospitals". This gives more details from the latest study. I quote " --- patients at for-profit hospitals are two to four times more likely than patients at not-for-profit hospitals to suffer adverse events --- " 2

This article states

"Previous research has found death rates 25 percent higher at for-profit hospitals than at teaching hospitals and 6 to 7 percent higher than at non-profit, non-teaching hospitals. In addition, for-profit hospitals employ fewer nurses, charge higher prices (costing Medicare an additional $5.2 billion annually) and spend a higher percentage of their budgets on overhead.

A study published last year in the Journal of the American Medical Association also found that for-profit HMOs are lower quality than not-for-profit HMOs on 14 quality measures."

Australia's Dr Wooldridge has made political capital and criticised the health care profession on the basis of a study of adverse events similar to that by the Institute of Medicine. At the same time he has promoted "marketplace reforms" in the Australian health care system -- exactly the system which is so dramatically shown to increase adverse events and deaths in the US system.

I will review articles which reveal an even more startling situation in the Nursing Home marketplace later. 

Legislative patching again

An article "U.S. Senators Draft Medical Errors Bill" describes the bills which congress are debating to deal with the problems. 3 The emphasis of this remedial legislation is on confidentiality and voluntary reporting. The representatives understand that oversight and punitive measures cannot and have not worked. However they carefully avoid the critical problem of market pressures. There is little likelihood that what they propose would work in a corporate health care marketplace. The pressures, stresses and threats to which staff are subjected will make this impossible. Once again the causes of the problem and the actual context in which the problems are occurring are ignored.

It was exactly this problem of monitoring and personal support which led me to suggest an integrated cooperative health system, built around "services", each supported and coordinated by the full resources and know how of teaching institutions. (about 25-30 years ago!) The figures above show that this teaching hospital expertise results in death rates 25% less than in for profit hospitals. Shouldn't we seek to spread this expertise?

Because Australians do not understand the significance of the forces generated by "for profit" medicine I have put an extract from an April 2000 www page I wrote into the accompanying file.4 This describes how the different pressures operate in the for profit and not for profit systems with particular emphasis on the impact of capped systems and other forms of cost containment on the corporate marketplace when contrasted with not for profit systems. The way in which health care corporations under financial pressure respond is well illustrated by aged care in the USA and Riverside in Australia.



Two articles "Mayne role to test Smedley" 6 and "Mayne chance for full recovery" 7 describe the latest development in the Mayne Nickless saga. It seems that corporatised health care is not flourishing and a ruthless hit man has been brought in to fix the problem. It seems that Barry Catchlove and the pugnacious Bob Dalziel were not aggressive enough in pursuing their health care objectives and cutting costs. Mayne Nickless has dumped them and gone head hunting for someone more able to cut costs and downsize the company and its health division. They have found Smedley whose reputation dates back to his role in Shell Healthcare, the company which half the world boycotted because of its dealings with the oppressive Nigerian government.

The only information I have about Smedley comes from these articles. Smedley's likely character is reflected in the claim "Smedley, the cigar-smoking, sports-loving ex-oilman who left the top job at Shell to turn around Colonial has topped the pin-up list of headhunters nationwide ----. ---he has proved he is capable of building worth, wealth in a business --- " Mayne are paying him $2 million to do it. "It's clear high energy is a Smedley trademark." He richly rewards senior staff but it "does not filter down much further". Smedley is known for his gruff approach and it's clear staff either love him or hate him. And if they hate him, they leave. He is idealised and admired in the business world because of his success. I quote "THERE'S a man out there who walks on water. He wears a white gown, he multiplies loaves and fishes, he makes the sick well and the lame run."

There are only two ways to make more money from health care in a system under financial pressure. The first is to defraud the system and the second is to cut staff and compromise care. The articles in the file show the consequences. Under the same sort of financial pressure Sun Healthcare reduced its staff from 80,700 employees in Feb. 20, 1999, to 57,100 currently. 108 The consequences for care are reflected in the articles I will review later.

The description of Smedley is remarkably similar to that of the high energy corporate giants who founded the great health care empires. Each was a "character", aggressive and ruthlessly focussed on the corporate process of making money - or as Andrew Turner put it "cutting the fat". Each chose to ignore the consequences for care. Each developed a system of thinking which allowed them to exploit the vulnerable, capitalise on the difficulties in monitoring care, take advantage of the inadequacies of accrediting and monitoring processes, and take advantage of the inability of the consumer to act as an effective customer. They were entrepreneurs in every sense of the word. David Malouf in his Boyer lectures describes this ruthlessness, an ability to see and seize opportunities, and having an "eye for the weakness of others" as characteristic.

The comparisons with not dissimilar reports about Richard Eamer (National Medical Enterprises), Richard Scott (Columbia/HCA), Andrew Turner (Sun Healthcare), Lunsford (Vencor) and Elkins (IHS) are easily made, but we will have to wait and see if he behaves similarly.

I have included recent and a few older articles describing Andrew Turner and Elkins corporate conduct in the file as examples so that the comparisons can be made and the risks of similar conduct in Australia evaluated. 107, 106, 112, 114, 115, 97, 98 I have written a separate analysis of Turner and Sun Healthcare. Turner too was hated or loved. He surrounded himself with those who would go along with his practices and beliefs. They worshiped him and were richly rewarded, but those rewards did not extend beyond the opulent corporate office. All those listed above received massive personal salaries and were greatly admired in the marketplace and in political circles. I have used the concepts of "extreme closed mindedness" and "successful sociopathy" to analyse this sort of behaviour and show how the financial pressures of the marketplace select for these people - the sort of aggressive opportunistic people least suited to the task of fulfilling society's obligations to care for its members when they are unable to care for themselves. They are interested in financial opportunities and not the welfare of fellow citizens.

The articles try to soften the harsh image they present of Smedley. I quote "He may be a corporate bastard but there is a big welfare streak in his personality,"--- . They describe his involvement in Care Australia and his donations to charity. A search for a philanthropic "do good" personal image has been a characteristic in the personalities I describe. I suspect that this identification with a projected positive image helps them compartmentalise and wall off the less palatable side of their activities. Eamer donated large sums to charity. He was lauded for his philanthropy. The money he gave away was generated by needlessly admitting thousands of children to psychiatric hospitals, keeping them there for the duration of their insurance cover and maximising profits by providing them with vast quantities of treatment which they did not need. His company paid a US $379 million criminal fine and over US $100 million to compensate insurers and the children who had been severely misused. He was forced to resign but received a US $9 million termination reward for his efforts. I have written a separate analysis of Sun Healthcare and Turner.

2. ALPHA HEALTHCARE:- The bankrupt Sun Healthcare is the dominant and controlling share holder in Alpha Healthcare which is not doing well in Australia. 8 Alpha is no longer trumpeting the advantages of Sun's support and its expertise. The profitability margin in its core business of private hospitals has fallen from 9.8% to 6.6% and its net operating loss was $2.103 million. It is not paying a dividend. Its senior manager Paul Hopper has fallen on his sword and resigned and staff are being culled. It has sold its pathology businesses to Sonic Healthcare and Mayne Nickless. It has sold its General Practice centres and other facilities in West Australia to Revesco. One of its subsidiaries has been in voluntary administration and Alpha has had to bail it out. It has reduced costs in its remaining core business - hospitals - and this should be interpreted as cutting staff, probably nursing care.

Alpha has also raised $30 million by selling and then leasing back four of its hospitals to an unnamed group. 9 This has allowed it to pay off some of its creditors including the bankrupt Sun Healthcare. It is important to understand that this is also a strategy used by US nursing homes and their corporate creditors to protect assets when threatened by bankruptcy. Vencor in 1998 split off its hospitals into a renting REIT with the same directors and corporate investors calling it Ventas. As I understand it when the company collapses the banks and corporate investors are protected. Ordinary shareholders lose their money and a new provider is formed to rent the homes and carry on the business. This is happening in the USA. A large number of Sun's homes are rented from REITs particularly Omega Healthcare.

What will happen to Alpha's hospitals if it goes under? Are its creditors protecting their investment by moving the facilities to a REIT which they own? Will government be forced to bail it out as is happening in the USA? Has NSW Dept Health got the resources to take over and run these hospitals?

Sun's chairman Andrew Turner has been forced to resign from the US company but we should not assume that we have seen the last of him. He has sacrificed a termination bonus in return for an agreement which allows him to continue operating in health care. That Turner and others from Sun plan to form another company to buy Sun's international operations and continue their practices in the international arena is suggested by the reports and comments in the Albuquerque Journal - Sun's home town. 111 I was also aware of this rumour and understood that the name being considered for the new company was appropriate -- Intrepid Healthcare. A recent article hints at Ballantrae Healthcare LLC from Atlanta as the vehicle for Turner's international ambitions.

3. THE CORPORATE JUGGERNAUT PRESSES ON IN AUSTRALIA:- While Alpha and Mayne Nickless struggle other aggressive business groups have adopted the same patterns of thinking and are rushing to capitalise on the opportunities which they see in health care. They may be aware of the pressures being generated by the world economic community at the WTO for global health care markets.

An article in the Courier Mail "Dangerous PRACTICE" describes the way in which general practice is being taken over by new corporate groups in Western Australia and Queensland. 10 These groups have adopted the same model of vertical integration used so successfully by Columbia/HCA and other US corporations. This enabled them to move patients through the system for maximum profit rather than patient benefit, and to offer inducements to doctors to do so. Mayne Nickless also paid service to this model. It has nothing to do with the sort of integration needed in the care of patients. It is integration in order to control referral practices and increase market share. In this instance they want the pathology and the radiology referrals of the doctors - what they call "cross-referencing downstream services"

This system is ripe for exploitation and for fraudulent practices. It required an enormous investigative effort in the USA - operation labscam - to expose and penalise those indulging in unethical and illegal practices including paying kickbacks. An article -- Doctors accept BMW bribes in "kickback culture of creative fraud" -- describes how this is already occurring in the increasingly competitive corporatised pathology marketplace in Australia. 11 I quote " -- its just too easy to sidestep the penalties, or too onerous to provide the level of proof required to put someone in jail" . This is one of the reasons why fraud has flourished in the USA, - but this is Australia! The article alleges that the companies indulging in these practices are prepared to "increase their market share through illegal activity". Once they capture the lions share of general practice there will be no stopping them.

General practice now faces large overheads and increasingly onerous administrative distractions from care in order to meet regulatory needs and supply more sophisticated equipment. This places great pressure on practitioners and gives these corporations a lever to bring them into the system. Corporations tempt them with up front payments of up to $400,000. They clearly believe that they can recoup this by securing their referrals. As the article also shows it is possible to provide this sort of backup using integrated systems which do not have profit as a priority and control of the market as an objective.

Three groups - Westpoint Corporation, Foundation HealthCare and Revesco T/A Total Care Australia have embraced this policy. Westpoint as I recall runs shopping malls and is likely to be influenced by the MacMedicine model.

4. REVESCO THE NEW FORCE IN AUSTRALIAN HEALTH CARE:- Revesco is a New Zealand mining company which , rather like Alpha Healthcare did not prosper. It tried to make money out of technology before turning to health care. One wonders what and who induced it to transfer its operations to Australia and to health care - where others have not prospered. One wonders if the failure of the government's plans to bring in multinationals to carry out its policies for Australian health care has led it to encourage any corporation without a criminal history to fill the void. The reality is that this rules out almost all established health care multinationals. That groups like Revesco have no experience in health care becomes irrelevant.

Revesco's Corporate Strategy and its motivation are quite clearly set out. 12 It introduces its strategy with "The company's key objective is to maximise returns to its shareholders.". The report documents its history and entry into health care. Its market capitation jumped from $42.39 million in June 1999 to $207.34 million in December 1999 during which period it switched all of its activities to health care, embarked on an acquisition spree and shifted to Australia. Someone must have invested very heavily in this effort. To justify this it must have had strong support from corporate and establishment Australia. It has no prior health care experience.

The breadth of its activities is revealed in Revesco's half yearly report on 15 March 2000.13 It is interested in any sort of medical activity which can be used to generate profit by referral from its general practice clinics. It is even targeting paramedical services. That its prime objective is to make money by securing referrals from the doctors in its clinics is revealed in a November 1999 report. 14 I quote

"The acquisition of the Perth Surgicentre further compliments the Company's move towards offering a total service to general practitioners and specialists, who provide services to patients through the Company's network of medical centres. The Company looks forward to working closely with the existing users of the facility and envisages no material changes to the existing operations."

The March 16, 2000 half yearly directors report (not included in the file) expresses it this way.

"The company is continually examining ways to expand its interest in the medical arena and a great amount of time, effort and cost is being focussed on the identification of add-on services that can be supplied to medical practitioners and the general public."

Can we doubt that it expects to get these referrals and that if it does not then it will take such steps as necessary to secure them. I have not seen a single word in Revesco's reports suggesting that it has any interest in the welfare of the sick, vulnerable and trusting citizens who are likely to become the bodies manipulated for profit. The reports reflect a total corporate focus on profit and only on profit. As John Ralston Saul indicated this is not a conspiracy. One simply has to listen to what they are saying. This is the way they think. It is real and the elected representatives of the people have no problems with this! They have come to think the same way.

In my separate analysis I have explained how Sun Healthcare saw the financial opportunities and then exploited the fee per service system to build its vast empire on post acute care.

It is perhaps no coincidence that Ian Trahar, the CEO of Revesco and Smedley, the new CEO of Mayne Nickless have been selected for health care by the market. I have indicated in the past that the health care marketplace selects for the sort of profit focussed person who is competitive and ruthless enough to make money out of health care. These are the sort of people who have generated great wealth for shareholders in the US marketplace. Both these Australian leaders received their grounding with Shell, the petrol company which was so focussed on profit that it happily went along with the abuse of human rights in Nigeria --

I can only ask how appropriate is it that these two should be the driving forces in an area where the business practices of companies with similar attitudes have resulted in the misuse, neglect and exploitation of vulnerable citizens? The information available from the USA suggests that they do have the qualities which make for financial success in the health care marketplace. What will happen to sick Australians when these two forces go head to head in our newly competitive corporate health care system remains to be seen?

5. MONITORING AND CONTROLLING CORPORATE ACTIVITY IN AUSTRALIA:- A report in the Australian - Outsourcing falls 'outside scrutiny' 15 - reports that Irene Moss from the ICAC in NSW is disturbed that the ICAC is unable to fulfil its functions when government contracts services to outside groups. The state of Maryland has experienced exactly this problem in health care when prosecuting HMO misconduct. 35 This is also the concern which I expressed when responding to the claims that the terms of contracts with health care groups would protect citizens from exploitation. The reports from the USA which I will address later show that oversight and accreditation processes have not worked. They have simply provided a reassuring facade behind which corporate interests could get on with the business of making money out of sick people.

6. AGED CARE IN AUSTRALIA:- Recent television reports document that a number of nursing homes are still providing substandard care and that attempts are being made to force them to comply. Experience in the USA shows that those homes which default, correct the problems temporarily but soon default again. Their profit priorities cause them to skate close to the regulatory requirements and get away with as much as they can

An article - Chelmsford group's record defended - documents that some of the nursing homes providing substandard care are owned by the same company which owned the infamous Chelmsford deep sleep therapy hospital. 16 In 1994 a member of the Commonwealth aged care department boasted to me of the steps which the department took to check on the probity of nursing home owners. In 1996 the government removed the probity provisions from the regulations. In 1999 I was assured by the minister's department that they were concerned about the probity of owners. They did not explain how this would be enforced. One can only ask how people like this were allowed to own nursing homes. These elderly citizens are even more vulnerable than those in Chelmsford.

An article in the Sydney Morning Herald -- Damning verdict on nursing homes - reports the findings of the Commonwealth Ombudsman. 17 This is highly critical of the governments response to information which suggested that residents in nursing homes were being neglected and misused to generate profits. It seems that people who persisted in reporting disturbing situations were written off as "serial complainants". The consequences of similar approaches in the USA are reported extensively in the articles I include here and I will deal with them later. I had drawn the problems in effective oversight of corporate facilities to the attention of Australian governments including the ministers department. I was given assurances from the ministers department at the time.

As I see it the real problem is not in the commitment to monitoring but in the forces introduced into the system by the government's policy of privatisation and corporatisation. The government also has a major conflict of interest. If it successfully detects and prosecutes mistreatment in nursing homes its policy will be discredited and it will be heavily criticised. Experience and reason suggests that such an oversight system will not work.

7. TAKING STEPS TO IMPROVE CARE IN NURSING HOMES:- Leon Flicker from Royal Perth hospital writing in the Medical Journal of Australia (17 July page 77) asks "Healthcare for older people in residential care -- who cares?" 18 He describes a number of steps to "improve health care for people in residential facilities". One wonders how well these measures will work in a nursing home system driven by pressures for profit and the demands of the share market. I have not included this article in the file.

8. POLITICIANS AND CORPORATE MANAGERS:- Their is something horribly familiar about the article "Business leaders pay $5000 a head for the inside track on Labor". 22

Almost every email I get from groups in the USA stresses the close personal and financial links between corporations and politicians - the large contributions they make to political campaigns, the money spent on lobbying and the vast expenditure spent marketing positive perceptions to the community. They believe that this is at the heart of the problems in health care and the failure of regulatory structures.

There are now hard facts to support these complaints in the USA and I include reports. 125, 126, 127 There is a close correlation between donations to politicians and the way they vote. Some of the articles in the file address this problem. It is commonly believed and reported on television that Clinton's last election was won on marketing and that he secured the funds for this by selling interviews and so influence to corporate groups including health care providers. 97

The Australian article reports that the banks, mining companies and the health industry are all paying for access to Australian politicians. 22 As in the USA former politicians and staffers are being employed to lobby on behalf of corporations. The report also reveals the extent to which former politicians are welcomed into the corporate fold. The electorate can only wonder whether this is a reward for a pro-corporate stance while in power - for being a good boy. It is clear that exactly those situations which have caused so much angst and problems in the health system in the USA are alive and well in Australia.

9. ANOTHER HEALTH POLICY REVIEW PREPARED BY STEPHEN DUCKETT and LUCY HUNTER. 23 This review was commissioned by the Kennet government in Victoria to review Victorian health services to bring them into line with commonwealth competition policies and regulations. The guidelines were therefore set within the economic ideology of both governments. It was consequently not an open ended inquiry but to some extent a "Yes Minister" railway line from A to B. Only the methods for getting there were at issue. I have not yet read the reports and the governments response so cannot comment on the arguments used. I include the covering letter and the summary of the governments response to the report for your information. The full report and the response can be downloaded from ---

Some experiences from the USA do seem to be relevant to matters addressed in this summary and I comment only on these.

Item 4 recommends that the department " --- should no longer be able to take into account adequacy of health services in an area -- " and "The Department should remove the bed cap ---" The government accepts this recommendation.

In the 1980's certificates of need were required in the USA to protect citizens from exploitation by unscrupulous people. New economic policy at this time favoured market forces which were thought to be self regulatory. They would control quality and cost. The requirements for "certificates of need" before granting bed licences were therefore abolished for "specialty hospitals" including psychiatry in the mid 1980's

The corporate chains responded by building vast numbers of specialty hospitals. They mounted a massive marketing campaign to fuel citizens anxiety and induce trusting and anxious parents to admit themselves or their powerless children to hospital. This was regardless of the need to do so. Intense competition resulted as corporations paid large sums to bounty hunters for each head on a bed. These bounty hunters scoured the community to persuade people into hospital, and some adolescents were even kidnapped. Canadians were lured to US hospitals by bounty hunters and free flights in order to defraud their insurers. Deceptive practices were developed to hold people in hospital for as long as possible. 

Thousands of children and adults were admitted needlessly to hospital where they were held for the duration of their insurance, subjected to vast quantities of useless therapy, and so misused and exploited that many were later able to claim millions is compensation (over $US $135 million for one company).

I note from a recent article that certificates of need are still used in US states and attempts to abolish them are being resisted. Restrictions on bed numbers such as "Certificates of need" would be viewed by multinationals and the World Trade Organisation as obstructions to legitimate business activity and the effective operation of market forces. These groups will insist that this restriction be "liberalised" under free trade agreements. The Australian government is a strong supporter. I am consequently very suspicious that there is a hidden agenda behind this item..

Item 5 advises that probity requirements be retained. The USA does not have probity requirements. When the federal government revised the aged care regulations in 1996 they abolished the probity requirements and turned aged care into a competitive marketplace. The recent scandal about standards of care was predictable but government refuses to accept that their policies were contributory!

It is therefore very reassuring that the fitness and propriety requirements are to be retained but the recommendation that this be the only requirement is more problematic. All of the largest corporations in the USA and their directors were highly credible and admired in the marketplace - many were philanthropists. Until they committed fraud or were proven to have misused patients their propriety could not be questioned. To do so would have been ludicrous. Imagine Andrew Turner's reaction!

Examination of their policy documents and public statements would have revealed that these were lacking in real health care experience and in true humanitarian insight. Their philanthropy was form and image rather than care. They were totally unsuited to the health system. Their business strategies were self interested, irresponsible and exceedingly venturesome. This exposed them and consequently their patients to unacceptable risks in the event of any economic downturn. As can be seen from the articles I am sending as well as from previous material the consequences for the health system and for ill citizens have been disastrous. The same conclusions can be drawn from the recent information about Revesco and Mayne Nickless.

Australian Governments and the National Competition Council are promoting corporatisation and marketplace competition as a means of "reforming" health care. The US experience of this sort of reform is reflected in the articles. This suggests that staffing levels and quality of staff will also become critical issues in Australia. We already have problems in nursing homes. A US federal investigation recommends that minimum staffing levels be specified in law and some states have already passed such laws. The new nursing home regulations in Arkansas maintain the certificate of need. Minimum staffing levels are a condition of holding a licence.

In Item 6 and some other items an attempt is made to meet the requirement in the terms of reference that the public hospital system be competitive and compete with the private sector. In the USA government hospitals and not for profit groups primarily concerned about and focussed on care have not been able to compete in a commercial marketplace with corporations focussed primarily on profit and prepared to short change care. As Robert Kuttner indicated in his exposure of Columbia/HCA in June/July 1996 (N Eng J Med.) corporations set the rules for the "level playing field" and these are all economic. Government supports them in this while making much of quality, oversight, and penalties.

Experience shows unequivocally that corporate for profit chains cannot be trusted, that competition is not about care, and that both government and market oversight of care are ineffective in the health care marketplace. Throughout the 20th century regulatory structures and processes (eg law and police under apartheid) have bent to the prevailing ideology and failed to protect citizens. It is citizens themselves who have acted to address injustice and inequity often at great personal cost. In health care in the USA only the dedicated actions and personal sacrifice of individual patients, their relatives, community groups and whistle blowers have had any impact. Corporations have employed every strategy available to them to limit the rights and effectiveness of these groups in exposing corporate misconduct.

10. THE HARVARD STUDY OF COMMUNITY PERCEPTIONS:- A recent article - Elderly Worry About Future Healthcare Costs 5 - reports the findings of the Harvard medical school's international survey of attitudes to health care. It found that citizens in those countries which had followed the economic rationalist path, the USA and New Zealand were far more anxious about the future of health care than other developed countries. The sick are vulnerable and experienced citizens wisely do not trust the marketplace. The market only works when citizens have power, are able to exert real influence, and are alert and distrustful. The sick elderly do not qualify on any count and intelligent citizens know this.

This distrust and anxiety has been one of the reasons for the election of the Labor government in New Zealand and their pledge to change the system and humanise care. The validity of the citizens perceptions is reflected in the articles I include. As long ago as the 1960's the sociologist Peter Berger studied the history of establishment structures in society. He found that establishment solutions and prescriptions were seldom in the interests of the majority of citizens, even when they were accepted as plausible and legitimate by those citizens.

The Harvard study supports the importance of medicare and stresses the deficiencies in the US system compared with countries like Australia. Citizens in Canada which has a universal health care system were less anxious. They valued this system highly. As the articles included show Canada has been even more deceptive to it citizens than Australia in running down their national health system and corporatising services128-130. A press report recently quoted our health minister as describing the Canadian medicare system as one which had failed. He did so in order to support his marketplace solutions.

D. MANAGED CARE -- contents


1. FAILURE TO MEET THE PROMISE:- Two articles - Managed care in the international context 19 - and - Managed care -- managed ethics 20 - both in the Medical Journal of Australia review managed care in the international context. They describe its failure to fulfil its expectations and realise the claimed benefits. They describe the way in which it has moved the focus of health care from the doctor-patient relationship to the doctor-payer relationship. The second articles indicates that the " key change has involved clinical control being wrested from physicians and conferred on HMO's ---- " The authors are critical of the way in which Australian governments have "In spite of the US experience --- made vigorous attempts to introduce policies to intensify the operation of market forces in this country" A pro-managed care conference in Washington also describes some of managed care's failures. 38

2. AETNA - AN EXAMPLE:- Included in the file are more articles which reveal the consequences of managed care in the USA. Managed care's role model, Aetna, the largest and greediest of the HMO's has fallen on its sword and done a mea culpa. 24-30 This is in response to the public outrage sweeping across the nation, to intense pressure for legislation to control HMO practices, to a series of multimillion dollar class actions, and to court actions by state governments charging HMO's with unethical and illegal conduct. More than other HMO's Aetna's share price has plummeted.

Shareholders have forced the resignation of senior staff, and forced the company to consider take over offers should they be made. The company is being split up. It is selling its international operations. It is terminating some of its US operations and dumping the patients in those regions where it has been unprofitable. Shareholders may be unhappy but it is these patients who are paying the highest price, a price compounded by shareholders discontent at falling profits. Is this market theory at work?

Aetna will stop offering HMO coverage to seniors in several cities. 30 These are the seniors who are covered by medicare. Medicare pays less well and seniors, many from less affluent sections of society are more often ill and so unprofitable. The disruption of care for the patients who have entrusted their well being to Aetna will be considerable. The government once hailed their policy of moving medicare recipients from direct medicare reimbursements to contracts with corporate HMO's claiming this would be less costly and offer greater benefits. It has been a disaster and the article claims that "the exodus of health plans from Medicare has affected more than 700,000 Medicare beneficiaries" in the first 4 month of this year.

What Aetna is really frightened of and is fighting is patient rights legislation which would allow a rash of law suits by individuals. People are angry and Aetna's conduct has been so reprehensible that in the few cases successfully prosecuted, using loopholes in the ERISA laws judges have awarded massive punitive damages, some over US $100 million. 26

Aetna has reached a face saving agreement to settle an action taken by the Texas government in which it claims that it has promised to abandon its business practices; those critical HMO practices on which their financial success depended. The company and the Texas government have hailed this as a sea change and a blue print for the future. 24-26

Those more familiar with corporate behaviour and corporate relationships with politicians have examined the agreement more critically and are far from convinced that it will fulfil its promises. 27 They believe it is full of holes. The savings made by HMO's, and their ability to squeeze profits from health care are based on their control of the medical profession and their use of incentives and disincentives to control and restrict care. They will not readily abandon this. The agreement does not really prohibit this.

Politicians are unwilling to address fundamental problems as this would force them to challenge ideology and strongly held beliefs based on this ideology. If effective controls had been included in the agreement these would cut into profits and costs would rise to maintain profit levels. It is not realistic to expect politicians to introduce controls on HMO's which are likely to work.

The Texas settlement does not forbid financial incentives to doctors, but the wording gives it a sugar coating claiming that "--- any financial incentives to doctors do not affect the quality of care received by patients." The HMO's all hotly deny that their practices compromise quality of care. One can only wonder how this will be enforced. Health care corporations have shown themselves to be totally dishonest whenever they think they can get away with it. The reports of its conduct indicate that Aetna has been one of the most ruthless and dishonest. Richard Blumenthal, the attorney general of Connecticut, who is investigating certain practices of Aetna, said the Texas agreement "perpetuates and disguises two central failings endemic to the industry, undisclosed financial incentives for doctors to limit care and undisclosed criteria for discouraging claims."

Neither New York nor Connecticut, which has sued other HMO's and also successfully prosecuted Sun Healthcare for a US $8.4 million fraud have accepted the Texas settlement. Both are still investigating Aetna with a view to prosecution.

The politics behind the Texas decision should also be understood. 27 The attorney general Dan Morales who has been a fearless prosecutor of health care since he initiated the first multimillion dollar health care fraud action against Tenet/NME in 1991 commenced the action against Aetna with the clear intention of holding it accountable for its practices. He was recently replaced by Mr. Cornyn whom one article links to a political group which solicits donations to the republican party from corporations including HMO's. Aetna, despite its financial problems has donated US $65,000 to the republican party since December 1999. As I recall the action was commenced before this but neither Aetna nor Cornyn will disclose whether it was made through the attorneys general association which solicited the donations. Cornyn denies a conflict of interest.

A different and more positive slant to the undertakings given by HMO's is taken in an article - Quality is now a factor in HMO care 31 - This article in the LA Times is by two authors who have written a book critical of managed care. The article provides brief insights into the problems in managed care. They refer to United Health's recent claim to a radical change in policy and the sharemarkets positive response to this. They attribute this change to a change in the country's laws which allow citizens to seek redress when they are harmed by HMO decisions. HMO's have spent millions in lobbying and donations trying to prevent these laws from being passed.

The authors do not challenge the HMO's claims to be more focussed on quality. The sad reality is that HMO's must be financially competitive in generating profits. To compete successfully they will skate as close to the boundaries as they can. Only those quality considerations which can be measured and prosecuted in court will be addressed. The solution, while it may help is based on increasing the conflict between care and profit to give care a slight advantage. Competition with profit is actually the problem and not a solution at all. The HMO's must make a bigger profit than competitors to survive. The requirement that more money be spent on care will simply push up costs.

The authors' views strongly support the similar claim by nursing home advocates that the only thing which has improved care in corporate nursing homes is the litigation which they have initiated. Nursing home chains are lobbying frantically for laws to stop this litigation.

3. HMO DISHONESTY, RACKETEERING AND FRAUD:- An article -- Cost-cutting guide used by HMOs called 'dangerous' 32 -- illustrates how untrustworthy and dishonest these corporate groups are. A treatment guide for HMO's used as the reference standard when overriding doctors decisions about care is written by a firm of lawyers. The University of Texas-Houston Medical School is paid a considerable sum of money to review and rubber stamp the guide. It is alleged that the lawyers bought legitimacy for their guidelines by giving the paediatric department US $100,000. Dr Cleary, a paediatrician's response to the guide, when he was asked to review it by the faculty was that "Kids might die because of these guidelines, they're dangerous."

Imagine Dr Cleary's surprise when he found that his comments had been ignored and worse still he was listed as a contributing author approving the recommendations. His experience is not unique. Large numbers of reports indicate that medical, research and educational institutions across the world including Australia are prostituting themselves in the drive to obtain money from corporate groups.

Research institutions are pressured by government and government policy to do so. The ARG (the Australian 9 August ) stresses that "Research must be linked to industry" and urges stronger links between universities and industry. The ARC urges the sharing of staff and is positive that the cultural gap is decreasing. This is the cultural gap which protects the integrity of research from commercial self interest. The ARC approach is being embraced by universities now that money managers rather than people managers control our academic institutions. In the process well validated social principles of openness, ethics, community responsibility and patient primacy are likely to be thrown out of the window.

Six class actions have been filed in Florida federal court against Humana Inc alleging racketeering and " -- for failure to disclose financial incentives and misrepresenting the quality of care provided by the company's various health plans". 33 The actions claim "systematic and intentional concealment of accurate information -- ". Humana promised that decisions would be based on "medical necessity" while concealing incentive agreements with doctors to limit treatments.

Humana has also recently paid the US government US $0.5 million and entered into an integrity agreement to settle fraud charges that it provided inaccurate information when making medicare claims. 34

In Maryland more than a dozen health plans, including Aetna and United Health care have been fined a total of $1.6 million for failing to comply with a variety of state consumer and provider protections. 35 Some have been required to undo the harm they have done by funding consumer education programs

The same article refers to the problem of "downstream risk" arrangements, whereby patient care and other responsibilities are shifted to a contractor. The state does not have direct regulatory oversight of these contracted organizations - exactly the problems identified by the ICAC in NSW, Australia. 15 Regulatory bodies are unable to protect the public interest.

The problem of denial of needed care by HMO's is US wide. Wisconsin has now joined more than a dozen other states is setting up an independent review mechanism to which patients can appeal when their HMO's deny them care. 36 All these regulations result in an increasingly more complex and more costly system. They fail to address the cause of the problem.

4. THE COST VERSUS CARE CRISIS:- A group the National Coalition on Health Care has carried out a study which finds that the break on rising costs is over and that health care costs are rising. 37 Premiums are rising and it predicts that there will be a massive drop off in insurance cover and increased cost shifting to patients pockets. It calls for a national debate to solve the problems of rising costs, decreasing coverage and poor care.

It is obvious that the problem cannot be solved and that compromises involving rationing will be needed. The marketplace cannot address this problem. It is simply not acceptable to ration care to generate profit for shareholders. It will require a great deal of corporate econobabble to argue around that moral issue. The likelihood is that economic decision makers will simply look indignant and claim that a moral problem does not exist.

A report -- HMO Promise Not Realized for Chronically Ill 38 -- from a conference supporting managed care and evaluating new managed care projects in Washington indicates that "The one-time promise that managed care would help coordinate and integrate medical and social services for chronically ill Americans has not lived up to its potential". I remind you that managed care commenced in the 1960's as a not for profit community endeavour but has been hijacked by for profit groups and for profit business practices. One speaker describes the impact of increased competition on an HMO which attempted to focus on services for doctors and patients rather than profits. It went under. The report suggests that while some managed care principles are worth holding on to HMO's may not exist in 10 years time.

A press release by a non profit university group called University Affiliates -- University Affiliates Proving Success of Patient-Centered Health-Care Delivery 39 -- trumpets its financial success in pursuing a policy of patients before profits. In the past projects like this have been unable to compete. At the present time there is a massive swing against managed care and projects like this have a window of opportunity. This group seems to be seizing it. One wonders how they will fare when the present outcry against managed care blows over and large profit oriented corporate groups once again increase the competitive pressures. The appropriateness of evaluating patient care in terms of marketplace success is not considered.

An article in The Australian - Fix own ailments, minister tells aged 21 - reports that Australia's Dr Wooldridge is pushing and funding the "Chronic Diseases Self Management program" in which patients take over from doctors in understanding and assuming responsibility for their care. The idea of involving patients more closely in their own care is a sound one and would be easily incorporated into an integrated not for profit community service. One wonders how such a program will fare in the competitive for profit, corporatised, managed care based system which Dr Wooldridge has so strongly supported. How will corporations make money from this?

5. COMPETITION FOR WHOSE BENEFIT:- A letter to the Bangor News - HMO executives 40 - casts an interesting light on HMO's demands for more competition and the "for profit" versus "not for profit" debate. In Boston where health care is competitive and HMO's dominate costs are high and profits low. In the countryside non competing not for profits dominate, costs are lower and as the material shows services are probably better. The HMO's are calling on government to force the rural health system to be more competitive. The writer asks "Competitive for whose benefit?"

6. ACADEMIC INSTITUTIONS:- There have been a large number of articles backed by data which show that institutions which provide important ethical, humanitarian and other non income generating services to the community cannot both survive and maintain those services in a competitive marketplace. There is a vast literature describing the rape of community health care resources (PACMAN activity) and the destruction of university teaching systems. I include one more addressing the impact of managed care on university hospital systems. 41 While these organisations can become competitive businesses they cannot do so and also maintain their important roles in society - including the training of future doctors.

7. MARKETING:- A press release "Managed Care Leaders Name - - 42 " gives an insight into corporate thinking and pharmaceutical managed care practices. The success of the largest and most successful health care corporations has been built on marketing, much of it inaccurate and deceptive. These are the same companies which have paid massive fines for fraud and misusing patients. They have considered marketing, and not care as the prime recipe for success. The pharmaceutical managed care leaders have run a marketing competition and SmithKline Beecham was one of the winners. Only a few years ago it reached a US $325 million settlement with the US government because of allegations of deceptive and fraudulent practices including paying kickbacks to doctors.

8. INTERNET SALE OF HEALTH CARE:- Economists will welcome the latest internet projects. Sites are selling surgical procedures. 43 Surgeons bid to provide the services and supply their qualifications, their results and other information so that customers can buy. Some customers welcome it as the "wave of the future" - others are more concerned about trust. To test the site's ethics and trustworthiness one doctor joined as a psychiatrist and then successfully bid to perform a breast implant.

9. WHEN IS CRIMINAL CONDUCT ETHICAL? In the hospital where I worked in South Africa we systematically manipulated the apartheid system for the benefit of our disadvantaged black patients. No doubt the apartheid government and its supporters would have considered this fraud but few would criticise us now. An article "Docs Admit Falsifying Insurance Info" reveals that US doctors who put the care of patients above economic ideology are doing the same. 44 Most doctors would approve and I like to think that the courage of these doctors in running risks for their patients will one day be acknowledged. An imposed health system which sets itself on a collision course with the fundamental principles of health care cannot work.


The bitter battle for legislation to protect patients and give them the right to seek redress from HMO's continues across the USA. It is bogged down in dispute federally. The Republicans in Michigan have bowed to the public backlash and are passing legislation to allow citizens to appeal denial of care. 45

Republicans who receive most funding from corporate groups have acceded to the intense pressure of the entire corporate community who pay the insurance premiums of workers in the USA. Corporate groups have convinced politicians that allowing patients to obtain redress from HMO's through the courts will push up the cost of insurance and so care.

When one examines the extent of the problems which have resulted in the public outcry and the responses of the judges who have addressed these problems then it is clear that this is exactly what will happen. Once again government are not prepared to confront the fundamental problem in the health system and correct it. To prop up the system US citizens are denied one of the basic rights of every citizen in a democracy.

An increasing number of states have passed or are planning to pass legislation which restores the right of individuals to obtain redress through the courts. 46 Democrats who are pressing this receive far less money from corporate donors.


The long running investigation of Columbia/HCA is slowly drawing to a close. 47 It seems that some sort of settlement with the government has been reached but the sum to be paid and the conditions which will be imposed on the company have not been disclosed. No doubt it will be welcomed back into the fold and shareholders will rush to support it! It has an established track record for working the system for their advantage.

HealthSouth is the only giant US health care group which as far as I am aware has not yet been tainted by allegations of fraud and/or misuse of patients. It seems to have kept its nose clean. Now there is a report that it has been fined US $ 1 million for fraud in Alaska. 48 In fairness the fraud was set up by previous owners but it sounds as though HealthSouth did nothing to address the problem when it took over.

There has been a court case challenging Whistleblower legislation and their right to act on behalf of US citizens and the US government. 49 The judge upheld the rights of individuals to act in this way and lodge Qui Tam lawsuits on behalf of government, but not their right to act against US states on behalf of the federal government.


1. INTRODUCTION:- To understand the significance of these articles and the reported finding by government departments in the USA of truly appalling and progressively deteriorating standards of care in nursing homes it is necessary to understand the way the nursing home market has behaved in the past.

Nursing homes were originally founded by charitable groups for the long term care of citizens who were unable to look after themselves. A relatively low level of nursing skill was required. With increasing wealth and government funding the potential for profit arose. Corporations moved in and profit became a legitimate objective. Marketplace thinking replaced the humanitarian ethic and every opportunity for profit was exploited. Corporate chains soon dominated the marketplace.

Hospitals were under pressure from the DRG system and nursing homes saw the opportunity to provide what they called "subacute care" to patients who still needed high levels of skilled care.

In nursing homes therapy was provided as an item of service outside the DRG system. By shunting patients to nursing homes and giving them plenty of therapy vast profits could be developed. This was greeted enthusiastically and business prospered. These homes were also now outside the ambit of critical hospital auditing. This allowed chains to increase profits by cutting nursing staff who provided essential care and replacing them with staff who provided add on care which generated a fee.

On the pretext that bigger was better and that there were enormous economies of size chains went on massive buying sprees. It was a case of take over or be taken over. The rationalisation that nursing homes were overstaffed and over skilled, and that there were inefficiencies and plenty of fat in the system was music to shareholders and politicians.

Care was seriously compromised as essential staff were cut and deskilled. Salaries were kept low and the dregs of society, many of them with criminal convictions for violence were dragged into the homes after some token training. Staff who provided non essential services paid per item of service and which were profitable replaced trained nurses. The medicare system was worked to the limits and beyond. Fraudulent conduct became the rule rather than the exception.

Many millions of dollars intended for the care of patients were taken from the system. Aggressive people with sociopathic tendencies and enormous drive came to dominate the marketplace - financial success was its own validation and they were worshipped by those around them and by the marketplace. (see analysis of Sun Healthcare and Andrew Turner)

This large income stream was used to raise increasingly large loans to fund growth in the USA and overseas. In the drive to grow caution and financial responsibility became passe. The chains built up huge debts and became dangerously vulnerable to any economic downturn.

While the nursing homes were starved and patients suffered central administration was richly rewarded. Directors enjoyed a lavish lifestyle with multimillion dollar salaries and bonuses, including private jets. Information revealing what was happening to patients was simply ignored. Not for profit groups found it increasingly difficult to operate in this environment and were forced into similar practices. Those who did not do so were taken over. They nevertheless maintained somewhat higher standards than the corporate chains.

The bubble finally burst dramatically and with sad consequences for the elderly. A number of factors contributed to this.

1. The government, frustrated by what was happening altered the payment system removing the incentive to provide unneeded item of service care and putting these services on the same footing as essential care - a cost to the business. Funding was cut, probably too severely as all nursing homes are now struggling.

2. Groups of citizens became angry at the treatment of the elderly. Ila Swan collected hard data in California and persuaded the federal government to investigate. The flow on of public anger resulted in investigation after investigation in California and across the nation. Dreadful standards were revealed and the failure of the regulatory agencies to do anything about it was exposed.

3. The federal agency responsible for oversight was heavily criticised by investigators and intense pressure was applied to state departments which had failed to regulate. With such close public scrutiny oversight practices were strengthened so that understaffed facilities were actually found wanting. Penalties were enforced. and the press published accounts of deficiencies.

4. The public took to the courts with devastating consequences. The descriptions and documentation of unconscionable neglect caused the courts to award massive punitive damages. Insurance premiums increased dramatically and in some states insurers refused to insure the homes.

5. The justice department had by now completed its investigation of Columbia/HCA. It turned its attention back to nursing chains and the majority of the largest were soon accused of defrauding taxpayers of hundreds of millions of dollars.

6. At the same time the economy flourished and unemployment fell. The working poor who had staffed the homes could now get much less onerous work at a better salary. The trained staff who had been fired during previous years had gone elsewhere. Nursing homes previously cutting staff were now unable to obtain the staff needed to address standards. The reduced medicare and medicaid funding made it difficult for them to increase salaries and so attract staff back.

The myths of economy of size and of fat in the system which were used to justify what was happening have been dramatically exploded. The larger the company the more likely that it had committed fraud, that scandalous patient conditions existed, and that it was financially unstable. 50 The largest companies were soon in trouble and the majority were soon in voluntary liquidation. They responded with massive staff cuts. The reports in this file show that this resulted in further deterioration in care.

Not for profit groups and smaller companies which have not been driven by the growth imperative have suffered but not as severely. Most have been able to maintain reasonable care and financial viability.

The corporate monster has many heads. Many of these companies shield their nursing home operations by using REIT's. The nursing home operator leases the homes from the REIT. When the nursing home operator goes under there are few assets and the mums and dads who have invested their savings get nothing. The founding directors receive handsome termination bonuses. New corporations with new names and no debts are seizing the opportunity. They are leasing or buying the homes. It will soon be back to business as usual. One can only wonder how many of the old faces will reappear. Sun Healthcare's Andrew Turner has no intention of hanging up his hat.

The recent articles about nursing homes which I have included in the file flesh out the story and describe what is happening in greater depth.


An article - Bigger isn't better; 50 - in the business journal Modern Healthcare makes the point I have made above. It is the large corporate chains and their driving irresponsible executives which are in serious trouble on all counts. Smaller groups and not for profit homes are weathering the storm.

A report from South Carolina - Medicare cuts hurt nursing facilities - enlarges on this and offers explanations. 51 It discusses the claims made by industry and sets this against the opinions of critics who believe that the big chains have dug their own graves. The article discusses the way in which the companies made their money by concentrating on medicare paid services, even though the majority of residents are covered only by medicaid. Only 9.3 per cent of beds are paid for by medicare. The government dare not allow such a large proportion of the countries nursing homes to go bankrupt. As one critic reluctantly explained government would have to give relief because "They're holding the federal government hostage"

The Wall Street Journal reports that President Clinton has developed some plausible justifications for doing this. 52 I quote:-

"President Clinton will propose boosting payments to hospitals, nursing homes and other health-care providers by $21 billion over five years --. ----- Mr. Clinton 's plan is likely to promote congressional efforts, fuelled by intense industry lobbying, to raise Medicare payments."

The New York Times reports that this money to support the profit hungry corporations (whose greed has created most of the problems) and their shareholders will be taken from money which has been set aside to actually help those who really need help. 53 Medicare benefits do not cover the large drug costs incurred by the elderly. Forty million has been set aside by congress to give them relief but the corporations want to get at it first. As Representative Pete Stark puts it "The money all has to come out of the same pot". I quote further:-

"Health care providers who feel they were wronged by the Balanced Budget Act in 1997 are all going after this pot of money. They hope that the money will become available to them if Medicare prescription drug legislation is stalled because of philosophical disagreements between Republicans and Democrats."

Corporate supporters will ensure that there are disagreements. The criticism is expressed like this:- "Some members of Congress say the struggle pits the needs of beneficiaries against the greed of providers." The corporations see it differently but are worried. I quote:-

'The Federation of American Health Systems trumpeted the findings as confirmation of its concerns. "May Day, May Day!" it said in a statement issued by Mr. Scully, its president. "America's hospitals have been pushed to the brink by the Balanced Budget Act."

Representative Pete Stark. says "Hospital lobbying is the most intense I've witnessed in a long time." The article gives details of the vast sums of money being spent on lobbying and other promotional activities. The track record of American politics is that the interests of those with the money to buy political support receive priority over the interests of the citizens who vote. Marketing strategies can be used to divert their attention. This is modern democracy at work. Australia is following.

The nursing home chains have repeatedly claimed that they are committed to patient care and that their financial plight will not affect patient care. State regulators have also assured the public that they have discussed the issue with chains and are satisfied that care will not suffer. They will monitor care.

Nursing home owners have used this as a public relations facade behind which they could drastically cut staff and increase their profits. An article in the Daily News gives the lie to these claims. 54 Complaints about the abuse of patients in New York nursing homes have increased 45% in the last 6 months. Their financial track record reveals that

" --- city nursing home owners paid themselves a combined $24 million in 1998 - most of that funded by Medicaid. The same owners made $140 million in profits. Five of them drew more than $1 million each in salary."

A new study by the Clinton administration has confirmed that nursing homes are seriously understaffed and that a large number of preventable life threatening complications are occurring. 55-57 More than half the nursing homes fell below what will be considered minimum standards. Staffing levels at non-profit institutions were much higher that staffing at for-profit homes.

The New York Times states

" - - - understaffing has contributed to an increase in the incidence of severe bedsores, malnutrition and abnormal weight loss among nursing home residents. Many of the patients end up hospitalized for life-threatening infections, dehydration, congestive heart failure and other problems that could probably have been prevented if the homes had more employees, the report says." 57

The report advises that minimum staff levels be required and set out "the minimum needed to prevent patients from being exposed to 'a substantially increased risk' of poor-quality care." The public has been clamouring for minimum staffing levels for years and they have been vigorously opposed by corporate chains. In California a citizens vote called for a law. The legislature drafted and passed the law but the governor who had close corporate ties simply refused to sign it into law claiming it would increase costs.

Additional information about this study is given by the San Francisco Examiner.58 I quote

"At least a third of the 1.6 million nursing home residents in the United States may suffer from malnutrition or dehydration, according to a study by the Commonwealth Fund released this week.

The report, which also found that the problem could be eased by increasing the number of overall staff and trained professional nurses, found as many as 85 percent of the elderly living with malnutrition in more than 17,000 nursing homes."

The St Petersberg Times in Florida has written many articles documenting poor care and neglect in corporate homes in that state. 59 They comment on the findings of the Clinton investigation and then go on to describe the sort of care consequent on understaffing for profit. They indicate that nursing homes have become "holding pens for the sick." where understaffing results in bedsores, malnutrition and injuries. With a huge backlog of work for nurse aides residents are "essentially force fed" stuffing "huge spoonfuls of food" into them. What chance is there that these residents will receive the small human touches from those around them - the social interaction which makes life livable.

Another report of an investigation by the General Accounting Office describes the failure of both state and federal oversight bodies and advises that they be strengthened. 60

Representative Pete Stark and a number of other federal politicians have been behind an audit of 288 nursing homes in the Bay area in California. 58 They have found that only 6 percent were in compliance with all federal standards. In addition:-

"41 percent of Bay Area nursing facilities -- 119 of the 288 homes -- cited with violations causing harm or placing residents at risk of death or injury received $141 million each year in federal and state funds."

The nursing home industry promptly attacked the credibility of the investigation claiming their figures showed that only 3% of Californian homes are deficient. The close relationships between state politicians and nursing home chains in California is extensively documented. These Congressmen have now introduced the "Nursing Home Staffing Accountability and Training Improvement Act."

The interesting thing about US and Australian investigations and reports is that all of them identify as problems only the symptoms of what is happening in health care. They all advise ways in which the practices can be detected, limited or penalised. None of them make any attempt to ask why the system is behaving in this way. The for profit mentality and the marketplace are all carefully shielded.

An article from Tulsa World addresses the issue of lax enforcement and then reviews some of the recent happenings in health care. 61 It addresses the relationships between oversight and these practices. I quote

"Every state has had its problems with lax enforcement, resident abuse and Medicaid and Medicare fraud. Not since a Louisiana scandal decades ago, however, have allegations this serious reached this high into official echelons."

An experienced lawyer who handles nursing home cases is quoted "I've never heard of corruption at this level,"

A second article in the Tulsa World reveals that what we are seeing is simply a recurrent event. 62 A nursing home operator and a government official in Oklahoma have recently been charged with giving and accepting bribes. Problems with nursing homes consequent on financial interest and a cosy relationship with government have been ongoing since the 1960's. Referring to Oklahoma the article says

"Through the past 40 years, similar themes and some of the same names have come up repeatedly: questionable campaign contributions by the industry, a cozy relationship between the state and nursing home operators, lax inspection standards and the Smart and Jiles family nursing home operations."

The article then describes some of the things which have happened, the financial relationships and the bribes.

Paul Labadie writing for USA Today - Notes from a tour of purgatory's barracks 63 -- describes his experiences when he and his brother started inspecting nursing homes in order to find one for his mother. His comment "The first thing you notice is the smell.". Administrators explained that the ''importance of the nurse-to-patient ratio is really a myth.'' Apparently good nursing homes do exist but they are very hard to find. Of 11 homes toured only one was "marginally acceptable".

The New York Daily mail - DA SAYS NURSE WITHHELD PATIENTS' DRUGS - uses the case of a nurse who has been charged with neglecting patients to highlight the stark contrast between the poor care, consequent on substandard, subtrained and under paid staffing at nursing homes on the one hand and the high costs, massive profits and lavish life styles of nursing home owners. 64 This article provides a graphic insight into the sort of people who are attracted to a competitive health and aged care marketplace. The Riverside scandal pales into insignificance by comparison. It may be no more than a pointer to the future.

All this has occurred despite the oversight of the New York state health officials. Public exposure has spurred them to some sort of action. The Associated Press reports their excuse - failing to act because they were understaffed. They have now issued "severe warnings" to 14 nursing homes but there is no mention of penalties or prosecution. 65 The real problem of course is the close relationships between owners on the one hand and politicians and regulatory staff on the other. This may not be a genuine attempt to address the problems. The corrupt situation exposed in Oklahoma (see below) is only the tip of an iceberg and an extreme example of the culture of benefiting by "being on side" with the wealthy and credible.

In Oklahoma the government investigation has blamed the failure of the oversight problems rather than the corporations for what has happened. 66 It is clear that oversight has not worked. There is the usual promise to "fix things". I quote.

"The Oklahoma Health Department's repeated "manipulation" of nursing home inspections and records caused untold numbers of patients to suffer from malnutrition, dehydration, accidents and physical abuse, state officials reported Wednesday. ----- many nursing home residents "received substandard care" because of department misdeeds. ------ inspection unit changed surveys to give nursing homes higher grades than merited. ------ Often, investigations of complaints are delayed for months --

The cause of the problem has been identified and charges have been laid because of :-

" --- bribery allegations against former Deputy Commissioner Brent VanMeter. Eight other department workers in nursing home supervision have been suspended with pay pending further investigations by law enforcement officials."

The scandal was only identified when federal authorities investigated complaints by frustrated patients' relatives.

It seems that the FBI have been investigating the health department in Oklahoma since 1996, and have now arrested the deputy state health commissioner and charged him with accepting bribes. 67 This suggests that a whistle blower was involved.

In Missouri an investigation by the state auditor has shown that state surveillance has also failed to protect citizens. The federal department responsible for overseeing the states to ensure that they monitor care has failed to do so. One Missouri senator puts it this way 68:-

"It defies reasonable explanation that an oversight system, whether it be state or federal, can so utterly fail to protect resident safety. We simply cannot turn a blind eye to life-threatening training and staffing failures. I firmly believe that the systemic problems in the MoDA are symptoms of inexcusable lapses by the federal as well as the state oversight programs."

Senator Bond is particularly distressed by the situation in one home where a patient was allegedly beaten to death. I quote

"A certified nurses assistant, who was formerly employed by the same nursing home, has provided deposition testimony under oath about the facility's hiring and training practices alleging that it began hiring workers "straight off the street" who "had never done the job ...didn't know the job...were put on halls by themselves, left to train each other..."

In response to corporate dysfunction and corporate influence layers of oversight have been developed up to the highest level in the land, each monitoring the sections below them. This is reminiscent of Graham Samuel's theoretical economic model of health care based on roles. It has not worked

To give the corporate side of the conflict I have included the text of the statement to a government committee on behalf of the American Health Care Association, by the chairman of Genesis Healthcare. 69 Genesis recently entered chapter 11 bankruptcy. In fairness to Genesis it has not been featured as prominently in press reports of nursing home abuse and neglect as its peers Beverly, Vencor, IHS, and Sun Healthcare.

3. ATTEMPTS TO ADDRESS THE PROBLEMS:- The response of state politicians and regulators is interesting and it varies from real attempts to address the issues and penalise criminals, through a facade of reform while actually coming to the rescue of corporations, and even to making political capital out of reform using the actual corporations responsible for the problems as authorities.

Consumer groups and relatives who have examined the financial and personal links with politicians are mostly sceptical of what is happening. Most are scathing about the soft line taken by federal authorities against corporate chains which have neglected elders and committed fraud. Authorities claim that they are concerned that they will be faced with an insoluble problem should these chains go under. Politicians are receiving very large campaign contributions and intense lobbying from those chains crying poor.

One of the soft strategies is to require corporations to enter into compliance and integrity programs, on the assumption that this will generate a changed attitude. These are the same corporations which have indulged in fraud and shortchanged patients! The U.S. Department of Health and Human Services' Office of Inspector General (OIG) has issued the final compliance guidance for nursing facilities directed at the prevention of fraud and abuse. 70 Predictably the American Health Care Association which represents nursing homes objected.

Arkansas has passed a law to require minimum staffing levels in nursing homes. I have included the synopsis. I quote

"This Act stipulates that the Department of Human Services shall not issue or renew a license of a nursing facility\nursing home unless that facility employs the nursing personnel needed to provide continuous 24-hour nursing care and service to meet the needs of each resident and the standard of care required by state and federal regulations." 71

Some new brooms in Indianapolis seems to have taken a strong stance and nursing homes are very apprehensive. Some administrators have been charged and the Indianopolis Star reports that "-- 68 nursing home administrators' licenses are in jeopardy and that another 40 administrators likely will face charges soon".72 The past failure of oversight is revealed. I quote

"Indiana Attorney General Karen Freeman-Wilson began filing charges against administrators recently after a backlog of complaints against them broke loose from the health professions bureau, where they had been piling up unattended for months."

Maryland was one of the states heavily criticised for failing to properly monitor care and prosecute offenders. There was plenty of publicity. Now Maryland has called a " -- national Elder Care Solutions Summit today, bringing together leaders and problem solvers from Maryland and across the nation to share solutions to the challenges of caregiving for our country's rapidly expanding elderly population." 73

In opening the meeting the government called it America's "silent crisis". However sitting at the table and giving talks on the "latest trends in caregiving" were the same corporations that have been at the receiving end of the bankruptcies, state surveys and court actions. The summit was widely publicised and the press report makes no mention of Maryland's track record. This is how the system works. Without a jaundiced eye the public reading the report might think something was being done and that the underlying problems were being addressed. No wonder little is ever achieved.

In Nevada the governor has increased Medicaid funding by over 7% with the apparent intention of helping groups like Vencor and IHS recover from bankruptcy. 74 Vencor is accused of a US $1,4 billion fraud and IHS is the company where in some homes only about 50% of the money paid for care is spent in that way. Vast sums are spent by IHS in political donations and I have previously sent information about this. The report makes no criticisms of the chains and does not mention all this.

Nevada is the state where in 1993 the Day One TV program mounted a sting operation. The attorney general was given clear evidence of fraud and the misuse of teenagers by HCA (now Columbia/HCA). He agreed it was fraud but explained that the company had so much political influence that he could not prosecute them.

4. CORPORATE DISHONESTY:- It is difficult to know whether corporations behave as deliberate criminals or whether social and psychological processes act in such a way that they actually see their conduct as legitimate. Undoubtedly both occur but I believe the latter is critical to understanding corporate conduct. Marketing is considered a fundamental and the most important activity. Marketing becomes the art of telling people what you want them to hear regardless of its accuracy. Once the claim is out there it is confused with the truth. Words become reality. Contradictions are simply not seen and it is perfectly acceptable to say contradictory things to different people. External appearance sold to the target audience need have no relationship to the truth and there need be no consistency.

A telling report in the Tampa Tribune - An industry on the brink of the truth? - exposes this process in the Florida Nursing Home Association and in Beverley Enterprises. 75

In the drive to stampede Florida politicians and its citizens into stopping law suits and passing legislation favourable to the politicians they claim "disintegration of the nursing home industry" and that "Nursing homes at the brink". Also "Under-funding and over-suing have finally taken their toll -- ". In contrast in its report to shareholders Beverly trumpets "Promising Opportunities Ahead." and "very promising opportunities". It boasts of steady growth in its "target market, people 85 and older." Statements about patient care are also contradictory. I quote the final paragraph of the critical article:-.

"So nursing homes providing care to thousands of residents are on the brink of closure, but the future is bright and the quality of patient care is high? --- Does this make sense?"

I also include in the file a brief report of the annual stockholders meeting. 76 Note the diplomatic way in which the corporate community deals with Beverly's recent guilty plea to fraud and its massive fine. That their company has perpetrated a massive fraud should not concern stockholders when there are "very promising opportunities" in the over 85 years customers. That these vulnerable and helpless people should be cared for by a company which indulges in fraud is not an issue. Even the Japanese who are privatising aged care have invited them in -- perhaps to show local companies how to make money out of the vulnerable aged.


5. THE NURSING SHORTAGE:- Corporate chains are blaming everything and everyone except themselves for the problems they are experiencing. The factors which precipitated the crisis and exposed what was happening receive all the blame. The funding cuts and the nursing shortage get all the blame for financial intemperance as well as for deficiencies and problems which developed during a period when the companies were making vast profits and downsizing staff. This allows the chains to sit on inquiries and promote a crisis which diverts attention away from their deficiencies and their disturbing conduct. They are able to claim victimisation and speak with authority, marketing their point of view. They direct attention to changes which will improve their bottom line. I have included a number of articles some of which reflect this bias.

A CBS news transcript gives a brief overview contrasting the corporate view and track record with that of the lawyers and citizens groups who are pursuing them. 77 The sad part is that good nursing homes have been caught up in this and are struggling to maintain care.

A report from West Virginia also indicates that although the major chains have suffered the most, many smaller operators can no longer fund care properly and are threatened with bankruptcy. 78 One third of the states nursing homes have filed for bankruptcy - primarily those owned by the big chains.

Nursing homes in Georgia are also bankrupt and there are a large number of vacancies for nurses. 78 In this instance Sun Healthcare is claiming the high ground. Sun has over the last year deliberately divested itself of over 20,000 employees reducing from 80,700 to 57,100. It is bankrupt. It is being investigated for an alleged several hundred million dollar fraud. Its nursing homes across the country have been penalised for severely substandard care. It faces numerous actions by patients or their relatives, and a Qui Tam action for not providing the care it has promised. This company which was in bitter conflicts with unions because it paid substandard wages while making massive profits and paying directors massive bonuses now blames the funding cuts. It claims it can't afford to pay competitive wages. Without even blushing it claims that it is being forced to diminish "what was a great infrastructure of services"!

It seems that it is the big impersonal profit oriented chains which have problems in finding staff. Those homes where care is the primary motive, and where employee involvement and humanitarian considerations drive care do not have this problem. I quote from the same article:-

"I didn't pick this job, it picked me," said Cook, who became administrator of the 78-bed home in September. "The residents and staff, we're like a big extended family. We laugh together, cry together and love each other."

The Denver Rocky Mountain News reports that Colorado's governor has set up a committee to solve the problem of the lack of workers in direct health care jobs. 80 That this may be a sop to the people and a public relations exercise is suggested by its name - "Blue Ribbon Panel on Workforce Issues in Long Term Care". Experience suggests that the committee is unlikely to address the underlying problem of profit priority and the corporate disregard for the motivational needs and well being of staff. While many of those on the panel look appropriate it also contains the president of Mariner Post Acute Network, one of the more unsavoury corporate chains in chapter 11 bankruptcy. It is unlikely that the members will be so insensitive as to attack him.

Nowhere has the support of corporations and the failure to prosecute been as blatant as in California. Ila Swan has been at the forefront in confronting their behaviour. Her efforts lead to a federal investigation and to television reports exposing financial links between corporations and politicians. Swan believes that this is why the federal investigation has had little impact on care. Swan says that "Politicians such as Davis and Lockyer take money from nursing home lobbyists and fail to protect the elderly inside nursing homes".

The Daily Republic reports on this and indicates that Swan will confront the state attorney general at a public meeting called by a community group two years after the local county took "steps to stop the abuse". 81 "I have a question for Lockyer," Swan said. "The Texas AG in one year prosecuted 100 nursing homes. What's the problem here?" It seems that in that time only one case has been prosecuted.

An interesting article from the Boston Herald puts a totally different slant on some issues. 138 It deals with concerns about the closure of nursing nomes - specifically one of Sun's homes. State officials say they are not concerned that homes are closing. They release some interesting figures to show why. There is an oversupply of 5000 nursing home beds in the state. There is a "glut of beds". This glut has resulted from overbuilding since 1980. The flood of words from US corporate groups and our Dr Wooldridge in Australia has painted a spectre of an overwhelming demand!

We have had all this hype about the greying population, the enormous demand and the opportunities for profit in aged care. It is reminiscent of the vast boom in psychiatric care in the late 1980's. The opportunities for profit resulted in massive overbedding. To fill beds hospitals went out and bought patients from bounty hunters - even kidnapped them. Norm Zober, Tenet/NME's director of specialty hospitals boasted to analysts of the tremendous continuing demand for psychiatric care and the profit potential. Patients were kept for the duration of their insurance to milk their insurers. Most of those hospitals were forced to close when the misuse of patients for profit was stopped.

This article raises the interesting possibility that a similar thing has happened in subacute care. Have post acute care patients who would otherwise have gone home been kept in nursing homes and given vast quantities of additional therapy simply to exhaust the funds which medicare could be induced to pay for this therapy? Now that medicare funding has changed and profit cannot be made in this way the "demand" for care has vanished. Beds are empty. This is exactly what a study of the past conduct of the health care marketplace would suggest.

6. THE MARKETPLACE FAILS IN ASSISTED LIVING:- Assisted living is another area where marketplace theories have failed. Assisted living facilities were seen as a growth area. As in Texas in the 1980's there was no regulation and no proper assessment of need. Vast sums were spent to create facilities which do not meet the needs of society. I have been aware of problems and of increasing fraud in this area but have not collected the material or tracked developments. The New York Times reports that the record profits predicted by economic analysts without practical experience in caring for the aged have not been realised. 82 Instead some now face bankruptcy. As in the specialty hospitals in the 1980's and aged care in the 1990's there has been "a binge of over investment and overbuilding, with too many companies trying to seize a trend." Staffing costs have been higher than anticipated. This experience may have relevance for the Victorian decision to abolish limits on bed numbers. It has been shown over and over again that the market and market forces generate malfunctioning services and are not self regulatory. Outside oversight is also ineffective.


7 FLORIDA AND NURSING HOME LAW SUITS:- Vast numbers of US citizens retire to Florida and it has a higher population of elders and nursing home residents than other states. This has provided easy pickings for corporate nursing homes. Standards of care have become a major problem. When the oversight system failed citizen groups and individuals took the issues into their own hands. They took the problem to motivated lawyers and then adopted a policy of seeking redress through the courts helping patients' relatives to act. They have carefully targeted those homes with the poorest care. Judges have been disturbed by the evidence. They have awarding large sums in punitive damages. Citizens believe that this is the only strategy which has resulted in any improvement in care. Many nursing homes are now unable to obtain malpractice insurance. Insurers will only cover those with the best track records for care.

The chains have responded by blaming the law suits on money hungry lawyers, but their claims are not supported by the insurers who indicate that the problems lie in the nursing homes. They have brought this on themselves. Corporate interests have mounted a frantic lobbying program in an attempt to induce the state to pass laws which would limit the rights of relatives to obtain redress once the patient has died. Lawyers point out that this removes the only effective deterrent and will cause nursing homes to drag out law suits for years until the frail elderly person has died.

The passage of a law like this would generate a public backlash. Instead of rejecting it outright Florida politicians are sitting on their hands. No doubt they are benefiting from the intense lobbying and can wait until the publicity has blown over.

I have included several articles which expand on what is happening.

An article "Nursing home companies, residents struggle in daily crisis" contrasts the experience and the views of a family which blew the whistle on a nursing home with the claims of the corporations that they are bleeding and that the law suits are taking money which would go to care. 83 They do not mention money going to profit. The article explores the different points of view. The view of citizens is as follows:-

" So when they hear that Florida's nursing homes are hurting because of skyrocketing insurance rates and want relief from the barrage of nursing home lawsuits, the Mongiovis offer no pity."

The Sarasota Herald-Tribune reports that some companies which can't get insurance may be taking the hint and leaving the state. Hopefully not for profit groups will be encouraged to take over. 89

The Tampa Tribune reports it this way:- 84

"The lawyers say they are the residents' protectors, out to assure that maintaining patients' dignity precedes corporate profits. The nursing homes, on the other hand, say the lawyers are profiting from the dying."

The lawyers also believe that the chapter 11 bankruptcy laws are protecting the chains from the consequences of their own misconduct . They suggest that the environment should be made more favourable to not for profit groups which provide better care. I quote extracts :-

"Wilkes says that in the short term the Legislature must provide more money for end-of-life care. He also would change the federal bankruptcy law so that nursing homes cannot file for bankruptcy protection. "

" Another lawyer, Ken Connor of Tallahassee, says lawmakers should consider incentives to encourage nonprofits and other organizations to enter the arena. He says we should not mourn the demise of companies whose financial problems are largely self-inflicted. ------ Our culture, he advises, is coarsened by our lackadaisical treatment of the elderly and the loss of appreciation for the sanctity of life."

A letter from the Coalition to Protect America's Elders published in the Orlando Sentinal documents the fraudulent conduct of the large chains and the investigations which have exposed dreadful standards in corporate homes. 85 They want the right of legal redress preserved and also call for a phasing out of corporate involvement in aged care. I quote:-

"---- In addition, we must take the national lead in providing new alternatives such as at-home care and other services that have proven cost-effective. ---- In the meantime, the state should provide incentives for smaller, community and faith-based nursing homes where the quality of care takes precedence over the profit motive. Above all, we must not rob elders of the few protections they have under law."

Beverly have won a ruling in a court of appeal in West Palm Beach prohibiting actions taken by relatives once the patient has died. 86 This overturns previous rulings. In this case the patient was clearly mistreated and neglected but then died of another cause. This has wide consequences and lawyers are aghast. I quote:-

"This will encourage defendants, who are notorious for delay, to delay even more with the hopes the resident won't survive. ----- Trial lawyers said the ruling guts patient protections and predicted it will force lawyers in Palm Beach and Broward counties and the Treasure Coast to reconsider or drop many suits pending against area nursing homes."

The Florida Times-Union in Jacksonville uses the dishonesty of a bankrupt nursing home and a Riverside like situation to open an in depth discussion of the issues surrounding for profit nursing home care. 87 Families had heard that the home was in trouble. On the same day as the home assured them that all was well, the nurses who had not been paid for weeks walked off the job and a chaotic, emotional and distressing Riverside like situation developed. This is what happens when chains run out of money. Analysts predict that there will be more. This is how the market operates.

A professor of sociology who has studied the issue in depth found that only 36% of the money paid for care is actually spent on direct patient care. About 27% is devoted to administration. I calculate that there is another 37%. Presumably it goes on marketing, political donations, lobbying, bonuses for directors and profits for shareholders. All of these are marketplace priorities and would not occur in a non competitive not for profit system. The professor points out that " For-profit nursing homes tend to spend less money on staff and have more violations than not-for-profit homes."

The consequences for the community is set out in the final paragraph of the article:-

"As bankruptcies and lawsuits plague these facilities, the burden of uncertainty affects the patients and their families, who worry about the quality of care and the possibility of sudden closing's. How did it come to this, and is anybody doing anything to fix the situation? "

No Australian politician can claim ignorance when a corporatised health and aged system becomes established in Australia. They have been supplied with vast amounts of information showing how it came to this. The significance of that information has been explained to them.

The Florida Times-Union reviews the states record for penalising nursing homes. 88 It reports lawyers and consumer group views that "people wouldn't turn to lawsuits if the government were tougher in penalizing negligent nursing homes." It then goes on to document how lenient and forgiving the oversight has been. Authorities have fallen over backwards to accommodate the nursing home owners and give them unlimited opportunity to correct problems. This was at a time when corporations were making vast profits and supporting political campaigns. I quote:-

"A report in 1998 by the U.S. General Accounting Office found that in 99 percent of cases nationwide, nursing homes that violated standards got a chance to improve rather than face a fine or penalty."

The articles which have examined the political response have suggested that politicians were procrastinating rather than acting by delegating to a committee. The Sarasota Herald-Tribune uses a patient's deaths from thousands of ant bites to illuminate the problem of neglect on the one hand, and the recent bankruptcy of Genesis Health Care on the other to highlight the contrasting problems facing the committee to which the knotty task of resolving the nursing home problems has been delegated. 90

Both sides are represented on the panel and this suggests that "the new long-term care panel will become the latest battleground for the war between the industry and trial lawyers."

The industry wants the problems solved by blocking litigation so that they have the money to provide care. The lawyers and consumers don't trust them as their greed and the consequent problems in care caused their downfall. They want those who don't provide care replaced by those who do -- not for profit groups. They see the right of redress as the only effective deterrent.


8. AND THEN THERE IS VENCOR:- Vencor is the company which under the leadership of its opportunistic founder, Lunsford built a vast empire by takeovers and mergers. When it started to bleed it adopted a number of socially intolerable practices such as sending home medicare patients still needing treatment in order to admit more profitable self paying patients. Vencor was the first to go into bankruptcy. A federal investigation is now chasing it claiming a US $1.4 billion fraud. It still claims to be trading out of bankruptcy. Not surprisingly there have been ongoing reports documenting substandard care in its homes. I include three articles to make the point.

Conditions at the Raleigh nursing home in North Carolina "are so dangerous, ----- that federal officials are fining the facility $5,500 a day and threatening to suspend Medicare and Medicaid payments, which could shut it down". 91 The News and Observer lists the deficiencies encountered and reports that a similar situation was found in the home a year ago. A further report a week later revealed even more deficiencies, describing a filthy understaffed cesspool where "very sick patients weren't getting timely help to restrooms and were left soiled and unattended in their beds, sometimes for hours". 92

Vencor's facilities in Florida are also a problem. Its Tampa hospital has been restricted to only emergency admissions until it improves standards of care. It has "severe deficiencies". The St. Petersburg Times also briefly lists Vencor's track record. 93

There are many articles documenting Vencor's attempts to generate a plan acceptable to its creditors and escape its US $1.4 billion fraud investigation. I have not included these. I have included an article from Kentucky which suggests that Vencor cannot recover and that it has few assets. 94 Some time before its bankruptcy the company split into two. Vencor which operated the nursing homes and Ventas, a REIT which owned the nursing homes and leased them to Vencor. The physical assets in Ventas were protected from risk. It had the same shareholders and Lunsford, who resigned from Vencor is still on the board of Ventas. The review clearly expects Vencor to go under. It examines the likelihood that creditors will find a legal strategy which will allow them to pursue Ventas in order to recover some of their investment. This article is of interest in Australia as Alpha Healthcare whose US parent Sun Healthcare is bankrupt is not doing well. It has sold its hospitals to a REIT and is leasing them back.

A 7th August press release by Vencor 136 was picked up by the Associated Press.137 Vencor has an even worse track record in patient care than Sun Healthcare. Vencor has been even more cynical in its exploitation of people in order to meet its financial objectives, to the extent that it simply callously dumped less well paying medicare patients in order to admit wealthy people who would pay more. The market is not about human values and this of course is how the market works and it is quite legitimate in the marketplace. The same sort of thing is happening in managed care across the USA. In Vencor's instance it was so offensive that government was forced to ignore its marketplace philosophy. It stepped in to prohibit what was happening and fined the company. Press reports across the nation describe the problems in Vencor's homes.

Government has now entered into a "Corporate Integrity Agreement" in regard to quality of care. This is the same formula which has been used before to avoid confronting the fundamental conflict between profit and care. If it works then internal monitoring may well be more effective than outside oversight. It is the sort of thing which I would support in an integrated not for profit system where the pressures towards dysfunction are less. It is also however even more vulnerable to corporate pressure and influence. In my view it will simply provide a more impenetrable shield for corporate activities.

For example. Tenet/NME entered into a similar integrity agreement in 1994. An ethics committee and ethical conduct were integral to this agreement. In 1996 the ethics committee were supplied with information and documents indicating that staff holding very senior positions had paid inducements to doctors and been dishonest in their dealings with government authorities. The ethics committee refused to acknowledge the documents. The US justice department was supplied with the same material and advised of the failure of the ethics committee to fulfil its obligations under the agreement. This material also was not acknowledged in spite of requests to do so. The precedent set for integrity agreements is not good. 

Vencor has appointed someone from outside with a long curriculum vitae as part of the quality oversight process. Tenet/NME did exactly the same. It appointed first the senior officer from the Department of Defence (DOD) to oversee its fraud prevention. Tenet/NME had defrauded the DOD's health system CHAMPUS of millions of dollars. Numerous complaints about care had been made to the department headed by this person without any action being taken. Tenet/NME also appointed a well known doctor. It trumpeted both as a reflection of its commitment to care and honesty. It did not reveal their remuneration.

The Vencor treacle which accompanies all this in the press release is fascinating.

"We believe the agreement marks a significant step forward in the efforts of the government and private enterprise to collaborate in establishing innovative approaches to ensuring and enhancing quality care for the long-term care industry. --- We also commend the OIG for its willingness to work with our new management team. We believe what we have developed with the OIG will be a model for quality care for the long-term care industry." [sounds like Aetna!]

"The agreement reflects our goal to become the nation's leading provider of long-term nursing and hospital services and to set the benchmark for professional excellence and commitment to quality care

Those of us who have seen vast numbers of similar statements over the last 10 years know that these are only words. The only people who believe them are the corporate directors who make them, and those who make money from corporate activities. They have elastic memories. The financial success of these companies is based on their ability to compartmentalise anything which conflicts with the corporate drive for profit and growth. How honest is the rest of this press release? I quote:-

"The corrective procedures in the Vencor agreement are relatively new, and Vencor is the first large nursing-home operator to agree to them."

Well actually no! This too is wishful thinking and a Public relations exercise. Integrity agreements like this have been the way fraud and other criminal disputes have been resolved across the USA for at least 6 years. A lesser settlement fee is paid and the company is able to continue operating. Government escapes the effort and cost of a protracted and difficult court action in a complex case where the defence can create endless red herrings, delays and legal bottlenecks. There is an enormous backlog of whistle blower cases and staff are released to deal with this. It is as they often claim a win win situation for both parties -- but sadly not for justice, the community, or for health care for patients. I does not address the cause of the problems or disqualify the corporate groups involved.

The Associated press article reveals that the US $1.4 billion fraud charge against Vencor originates from employee whistle blowers. It is exceptional for fraud action to be initiated primarily from oversight or government investigation.


9. INTEGRATED HEALTH SERVICES:- IHS has been one of the more disturbing nursing home chains. Its flamboyant founder, a Dr Robert Elkins displayed many of the disturbing characteristics of his peers. I have previously supplied information suggesting that only about 50% of the money paid for care in some IHS homes is actually spent in that way. Elkins is notorious for his political donations and close relationships with politicians. There have been many reports of problems in IHS homes and it is also in Chapter 11 bankruptcy.. I have included two articles addressing problems in care and two articles documenting Elkin's forced resignation and describing some of Elkin's and IHS escapades.

A nursing home in Colorado was found to have serious problem on a previous survey. Not only has it failed to address them but further problems have been revealed. 95

A nursing home in Dallas has had " continuous problems" which have ranged from lack of supervision and poor sanitation to sexual abuse. 96 Texas investigators have recommended the federal government terminate the centre's contract for Medicaid and Medicare at least eight times since 1996.

A resident has now been beaten to death by another resident. IHS says the killing could not have been foreseen. A nurse assistant arriving for work found "alert lights flashing and no one around". Others confirmed that the home was severely understaffed. The article lists the problems going back to 1997 when the company was very wealthy and Elkins was enjoying a lavish life style.

Elkins like Sun Healthcare's Andrew Turner grew his company by acquisitions building up a US $3 billion debt. 97 He and Turner pioneered the "subacute care" economic windfall which allowed them to bill medicare for vast quantities of ancillary care. IHS lost US $2.2 billion in 1999 after the bubble burst. Elkins received a massive salary and lucrative perks including an executive jet. He was most renowned for his dealings with politicians. I quote:-

"He also became one of the country's biggest political contributors. He and IHS gave more than a half-million dollars to the Democratic Party in the 1996 election. That got Elkins invited to three White House coffees - but didn't deter the 1997 Balanced Budget Act that was a major factor in bringing down his company."

The Baltimore Sun reports that Elkins will get a US $50 million termination package. 98 This reward for a dismal failure is not unusual according to an executive compensation specialist. This is the man who has paid nurses peanuts and diverted funds intended for care into his own pocket and to politicians. There are many reports of the consequences for patients. One of the company's critics puts it this way:-

"The board of directors of this firm has not been known for its wisdom, but you would not normally expect a board to do something like that. ---- Elkins had received lavish salary, bonuses and perks while running IHS. As a psychiatrist he should be suffused with guilt."

10. SUN HEALTHCARE:- Sun Healthcare's conduct is a salutary lesson for Australians as it owns a dominant share of Alpha Healthcare. But for the action of citizens who collected information, and its bankruptcy we might be looking at the same events in Australia. Alpha had clearly indicated its intention to enter our aged care marketplace using Sun's expertise and experience.

Fortunately for us Andrew Turner has been forced to resign and Sun Healthcare is looking for a buyer for its international operations. We should however be extremely wary as Turner has retained the right to form another company and continue operating. There are strong rumours that he plans to buy Sun Healthcare's international operations and run them through a nominal company. The rumour I have heard is a company named Intrepid Health Care, but other names have been suggested.

I have therefore included a number of articles describing Sun Healthcare and the escalating problems since it has entered chapter 11. I also include some which throw light on Turner's conduct, philosophy and management style. (see separate analysis) Two or three are older articles which I have sent before. You will recall that soon after our health minister had disclaimed all responsibility for Sun's entry to Australia he announced his plans to revolutionise health care using subacute care - the nursing home strategy which brought Sun so much wealth, accusations of defrauding medicare and finally bankruptcy when medicare was changed in order to stop it from being misused. I wonder how close we were to a similar disaster, had citizens not acted to force the Australian political establishment to confront Sun's conduct.

In Seattle the state has been forced to take over the operation of a Sun nursing home and appoint an outside manager. 99 The move follows repeated problems in the home over the last year since Sun drastically cut staff. I quote:-

"It came after state inspectors found what they said were serious and widespread deficiencies during an unannounced visit April 16. They included severe staff shortages that resulted in resident harm, neglect, improper feeding practices and insufficient supervision. At that time, the state immediately stopped admissions."

One of the residents in the home described what has been a central problem in all Sun's operations - an impressive marketing facade and glowing promises with nothing behind them. Many gullible people have been taken in and some of them have been Australian politicians. They ignored clear indications that there were major problems with this company at the time it entered Australia.

"From the outside it looks fabulous," said Rick Eldridge. "They've got a lot of bells and whistles. Then when you get in here you're totally shocked at some of the things that are occurring here."

A week later the state found many more serious problems in this nursing home. 100 I quote:-

"A second survey of the Eastside Medical and Rehabilitation Center completed May 3 found that the home failed to prevent residents from taking serious falls; provide them with enough pain medication; and keep their life-saving medical equipment in working order --- "

Two Sun homes in Alabama have been fined one US $10,000 per day until serious deficiencies involving the supervision of demented patients are corrected - another staffing problem.101 A failure in the other home cost a patient her leg.

Three reports describe the unfolding revelations from a Sun home in California. Sun's home did not have air conditioning and was the only one in the state which did not have plans to provide fans and respond to a heat wave.102 When a heat wave occurred untrained staff turned the fans on themselves and left the patients to suffer. This is the quality of staff employed. As a result two patients died and several others were admitted to hospital.

Sun was prevented from expanding its empire in California in 1997-8 because of poor standards in its hospitals - a time when it was very wealthy. This home was no exception and was fined in 1998 for causing a patients death. I quote from the recent article :-

"At SunBridge, county officials found dozens of patients sitting in sweltering hallways where the temperature was, according to one official's estimate, 100 degrees. ----- They had fans sitting at every nursing station. But while the residents were sitting overheated in the hallways, the fans were pointed at the nurses. We told (the staff) to turn the fans around. And so a couple of them got up and turned them around. The residents were an afterthought."

The San Francisco Chronicle reports that the home was fined US $141,000 and it may face criminal prosecution. 103 It is revealed that it was hot enough inside to "force the firefighters to remove a window to allow heat to escape." Sun has now installed screens and portable air conditioners but refused to install more costly air conditioning.

This article describe a large number of past problems in this home. Relatives of the patient who died have filed suit seeking damages. 104

The Albuquerque Journal reported on 18 May that Sun Healthcare is planning to sell its international operations. 105 An analyst describes Sun's international operations as a costly distraction. The article reports comment which suggests that Sun's UK and other international operations are still profitable and that there are plenty of buyers. My unconfirmed information is that the director of Sun's international operations was frantically urging the company to sell quickly as profits were falling and staff moral was crumbling. The situation was desperate. There were I believe few buyers prepared to make a reasonable bid. It was rumoured that Turner and a number of directors were patching together a new company and that creditors were urged to approve the sale to them.

The press is looking back at Sun's track record and at Andrew Turner's behaviour. In 1998 profits were falling and Sun was fighting a bitter battle with the unions because of understaffing, substandard care, and poor pay. In 1998 Andrew Turner's salary was increased and his total remuneration was nearly US $1.9 million. 106

The nursing union's comment sums up the gut reaction to all this. I quote:-

"At a time when workers were fighting for a living wage to support their families, for Turner and the company to spend its money thusly is obscene. It just shows you the priorities of rewarding those at the top at the expense of those who provide direct care at the bottom of the corporate ladder."

Will someone make this criticism about Mayne Nickless under Smedley in a few years time?

When Sun entered Chapter 11 bankruptcy the company offered Turner an additional half million dollars if he could steer the company out of bankruptcy. 107

Sun submitted its report to the US Securities and Exchange Commission four months late. 108 It reported a loss of over US $1 billion more than its nearly three quarters of a billion loss the previous year. "From 80,700 employees Feb. 20, 1999, Sun pared its work force to 57,100 on March 31." The previous press reports provide a small insight into what must be happening to patients in its homes as a result.

On the 13th of July Sun Healthcare announced that Andrew Turner had accepted the inevitable and resigned from Sun Healthcare. 110 The Associated press examined bankruptcy documents and found that Turner plans to pursue "alternative business opportunities in the health care industry." He gave up promised compensation in order to retain the right to do so. Turner has agreed not to compete with Sun for 2 years.

This would be in keeping with a plan to buy all of Sun's international operations and operate offshore. It seems that the health system, probably the international community will not be rid of him after all. The documents suggest that Sun's largest creditors will take possession of Sun's US operations and restructure it.

The Albuquerque Journal indicates that Turner will forgo US $ 2.5 million in order to continue in health care. 111 Clearly Turner is not going to go away gracefully. The paper puts it this way "Turner said he will resign all positions he holds at Sun in exchange for a release by the company to pursue other business interests within the health-care industry, - - " Tactfully put the separation "of Mr. Turner from the company is in the best interest of the debtors, their estates, and the reorganizing business." Under the agreement Sun Healthcare are prohibited from discussing the matter so we cannot ask them what Turner plans to do.

The nursing unions are delighted to see the demise of Turner but are concerned about his plans. They too indicate that "We've heard rumors that he would like to take Sun's foreign subsidiaries and split those off into a new company,"

The company paid US $26 million in 1996 to disgruntled shareholders who claimed that they had been misinformed. Shareholders once again claim that Sun had deliberately deceived them. The Albuquerque Journal indicates that " -- investors filed a class-action lawsuit against Sun. They claimed that Sun knew in advance that a change in Medicare payments would mean financial trouble for the company."

That Turner had seen the writing on the wall and was planning to leave the sinking ship and not save it, and that he was building up resources to embark on new ventures is also suggested by his actions. I quote:-

"Turner, who once was the majority shareholder of Sun stock, has been selling off large blocks of the company's stock since the beginning of the year. Between Jan. 1 and late March, Turner sold in excess of 4.5 million shares for nearly $330,000. At one point, he owned more than 7 million shares of Sun."

The Post Acute Payment Report reports Turners resignation and then reviews his career. 112 I quote:-

"The son of a career military man, Turner is a tall, trim man with a blunt way of speaking, an air of self-confidence and impatience with what he perceives as lack of initiative or short-sightedness that some interpret as cockiness."

The article reports Turner's claim that Sun made "huge profits' in the UK. Later it uses Sun's SEC reports to show that recently at least Sun was losing plenty of money in the UK. This was what I had heard. It seems that Sun like Beverly was giving its particular target audience the information it wanted them to have even when this was totally inaccurate.

We now know what was happening to patients in Sun's nursing homes during the successful years. The article tells us how Turner and his senior staff were behaving at this time. I quote:-

"Turner spent his money freely. 'He has built an elaborate private recreation complex, including stables and an arena, in the North Valley,' wrote reporter Thomas Cole in the Albuquerque Journal. 'He runs Sun from a corporate campus of four glass-and-sandstone buildings in Journal Center in north Albuquerque. Construction is under way on a fifth. The estimated cost of what has been built and what is being constructed at the campus is $77 million. There are outdoor sculptures and circular stone driveways. An extensive art collection, much of it Native American, is displayed in hallways and offices. There is an indoor pool for employees as well as a workout room and jogging track.' ------ Sun executives, added Cole, 'have traveled by corporate jet and stayed in luxury condominiums. In one case, Sun's nursing-home subsidiary reported to the federal government part of the costs of a $74,000 trip to Italy for some employees.' "

The article reviews Sun's track record, pointing out the signs of serious problems in the company. This is the same track record which caused NSW Health and myself to lodge objections to Sun's entry to Australia. The disturbing signs were ignored by the deputy treasurer. Despite the recent experience with Tenet/NME and Columbia/HCA he decided that Sun Healthcare did not pose a risk to the Australian Health system. This is a measure of the ideological blindness and grim determination of government to corporatise our health and aged systems. As Ron Williams had indicated in 1992 it was as if "Remission was Impossible".

I have previously supplied articles which described Andrew Turner's approach to the aged care business and his management style. I include four of them in the file. 114-117 I comment on these in a separate www page. Compare Turner's solution for health care in the USA with that which our Dr Wooldridge has tried to introduce in Australia.

Following Turner's resignation The Associated Press comes out with Sun's optimistic analysis in an article "Sun: Looking at long road back to health". 113 It indicates that it is selling to pay debts. It does not indicate that the market is not buying as there is a glut. I quote:-

"We sold our assisted-living company," he said. "We closed a small manufacturing company we had. Now we're selling our respiratory company and the international company. As a continuing part of the process, we're evaluating existing nursing homes and deciding to divest the ones that aren't economically viable." ---- "It still will be one of the largest nursing home operations in the country," ---- "I think we'll still have a stable, strong future,"

Despite this stable and strong future shareholders who invested their life savings will get nothing. However "Sun's senior creditors probably will end up owning the reorganized company." The new claims are that it will become a "competent provider of services and a sound business." and then the justification that "This is not a company that was internally in disarray. This was a company that needed to adjust to a changing environment and needed a major financial restructuring."

Despite its downfall and its behaviour Mark Wimer Sun's CEO now assumes a mantle of authority and his attempts to preserve Sun's market in subacute care is reported by the Albuquerque Tribune 139. He expresses his distress at the closure of homes and the inability to build new homes and improve old ones - referring specifically to "skilled nursing care facilities". (This is the company which cut quality and quantity of staff). He specifically refers to subacute care given after discharge from acute hospitals. This was where Sun made its money. This is the area where it wants medicare to restore funding.

It is increasingly clear that vast amounts on unnecessary subacute care and ancillary therapy was given. With changed funding the demand has vanished. In Massachusetts where Sun has been in so much trouble there are now 5000 empty nursing home beds. 138 As with psychiatry in the 1980's demand had more to do with profit than need. Wimer predicts that the funding cuts "will come back to haunt the country". -- well not as much as the country is now being haunted by the consequences of establishing a corporatised health and aged care system!

Sun Healthcare has supplied a list of companies it plans to sell. 139 Listed on it are "All international hospitals" so it will be selling its holding in Alpha. There is increasing speculation that Turner will try to take over Sun's international operations. The latest report from the Albuquerque Journal 7 August puts it this way

"Rumors have been circulating in the industry about Turner's future: that he is interested in forming a new company from Sun's foreign holdings; that he is already working for Ballantrae Healthcare LLC in Atlanta."

The journal indicates that Sun has managed to squirrel away many millions of dollars so he probably has the money to induce others to join him in this. Ballantrae Healthcare will not admit to working with him but said "we would be honored if Andrew Turner would consider joining our organization." How can a society which functions like this and displays this sort of morality survive?

The Albuquerque Journal 139 once a supporter of the local group reviews Sun's torrid history and its many failures. Its describes its meteoric rise to be the darling of the sharemarket and its fall so that "Sun's finances are in tatters". When asked for an interview Turner claimed that " -- the Journal has smeared him in its stories about Sun Healthcare. He questioned the newspaper's ethics and journalistic standards before hanging up".

I have many times pointed out that the health and aged care corporate markets select for people with enormous energy but with severely dysfunctional personalities. They define reality in their own terms and simply disregard anything which is not congruent with their views and personal success. They are the very last people who should be given responsibility for the care of people who are not able to fend for themselves. They should have no place in health or aged care, yet they are welcomed and courted by the market even when their deficiencies are exposed. Examine the reports in this file on Elkins and Turner. Similar conduct is found in Lunsford (Vencor), Scott (Columbia/HCA) and Richard Eamer (Tenet/NME). Then examine the reports from Mayne Nickless and Revesco. I believe the similarities are there.


11. OTHER NURSING HOME COMPANIES:- On 23 June the New York Times reported the latest and most recent large chain to enter chapter 11 bankruptcy - Genesis Health Care. 118 It was US $2 billion in debt. Its 42% owned subsidiary Multicare also filed for bankruptcy.

I have included a series of articles describing serious ongoing deficiencies and problems in nursing homes run by several groups. These are all within the last few months.

Mariner Post-Acute Network, which is also in chapter 11 is in trouble in Milwaukee where licenses have been revoked because of serious deficiencies. 119

A nursing aid in a Mariner Nursing Home in Richmond has been charged with sexually assaulting a paralysed patient he was bathing. 120 She was unable to resist. Nursing home groups believe that the rape of elderly residents is far more common than is reported as most families connive in avoiding publicity. This is because nursing home operators employ the dregs of society including many with known criminal convictions for violent crimes..

Guardian Health Group, a Californian nursing home chain has pleaded No Contest to a criminal charge of elder abuse and neglect. It has agreed to close or sell two homes and to place 16 of its Northern California nursing homes under the watch of the Office of the Inspector General for as long as four years. 121

Diversicare, a Canadian group operating in the USA which is also in financial difficulties is in trouble over patient care in Texas. 122 One of its homes has been cited for poor care at least two dozen times in four years and will now close.

Diversicare is to pay US $3 million including $2 million in punitive damages in an action taken by the family of an elderly lady who was grossly mistreated. 123 The judges are responding to the horrific evidence presented to them by awarding the sort of sums which will act as a real deterrent

In Philadelphia the Mercy Douglass Human Services Corporation has agreed to: pay the government $160,000 and to pay for oversight monitoring and a series of other conditions to settle an action relating to a shaft of allegations about patient care and neglect. 124 This is apparently the fifth case like this in Philadelphia.


Many critics, particularly those in California blame the close relationships between health care corporations and politicians and health departments for the failure to monitor, to penalise, to legislate and address the problem created by the profit motive. Campaign donations and lobbying are seen as central and a large amount of data has been accumulated to support their concerns. I include some recent articles in the file as there is much to suggest that Australia is following the same path.

The national consumer group Public Citizen organisation has carried out an investigation called "Holding Patient's Hostage". 125 They have carefully documented the vast volume of contributions made by managed care groups to the Republican party and linked this directly to the way in which senior Republicans have gagged and limited any support for effective patient rights legislation. I quote:-

"The report reveals the extraordinary range of pressures Senate Majority Leader Trent Lott (R-Miss.) and Assistant Majority Leader Don Nickles (R-Ok.) have deployed to keep reluctant Republican senators in line. And based on a new Public Citizen analysis of political contributions data, the report lays bare the financial ties that bind the "iron triangle" of pro-managed care contributors, their lobbyists and Senate Republican leaders that has worked in concert against strong patients' rights legislation."

In order to protect patients and strengthen doctors ability to protect patients the congress recently passed a bill allowing doctors to bargain collectively with HMO's. This is one facet of the move to give patients more protection and more rights. Australian doctors do not have this right and the ACCC has commenced an action against the AMA in Western Australia and Mayne Nickless for entering into negotiations about salaries.

An article "Donations Track Doctor Bill Votes" from the Associated Press examines a study done by the Center for Responsive Politics. 126 This documented the amount of money given to each politician by HMO's and doctors and then compared it with the way they voted. Those who voted for the HMO's position got twice as much money from the HMO's as those who voted against them. The doctors donated more money overall and the legislation was passed. On average politicians received between $8000 and $9000 from the doctors and much less, about $1000 from the HMO's. The implication is that the votes were bought.

As the centre put it "This is the other side of money and politics. People don't give money without getting results." Some politicians even suggested that colleagues deliberately tried to delay the vote so that they could collect more money from both sides.

The Metro New York Health Care for All Campaign has issued a press release about another Public Citizen Study. 127 This relates to the intense lobbying, marketing and PR activity to influence the decision to provide money to help elderly medicare recipients pay for drugs -- the "Prescription Drug Fairness for Seniors Act". As indicated earlier corporate interests want this money to be diverted to medicare payments to bail them out of the mess they have got themselves into.

It is revealed that the "drug industry has created and financed a campaign of deceptive advertisements through its front group "Citizens for Better Medicare" So far $65 million have been spent attacking Clinton and his plan to help elders pay for drugs.

I. CANADA -- contents

 A recent article which I have lost reported that Dr Wooldridge held up the Canadian medicare system as a failure in order to justify his policies. There is a vast amount of information about the intense battle that is being fought between the citizens in Canada and corporate oriented politicians. I have already supplied several reports. This is most intense in Alberta where a charismatic "trust me" Joe Belke Petersen type extremist leader has systematically and deceptively run down the public health system without disclosing to citizens what he was doing. Some of those involved have now rebelled and written accounts exposing what happened. Individuals and newspapers, once strong supporters have examined hard facts and reversed their positions. Studies have refuted and disproven all of the premier's claims. Care which has already been contracted privately was shown to be more costly, of lower quality and less expeditious. Despite this the Alberta government after many set backs is pressing ahead with Bill 11, legislation which will allow Alberta to contract care of public patients to corporations like Diversicare (sees reports of US operations earlier) and also US corporations.

An article - Bill 11 won't reduce costs or waiting lists - by an old friend and once a strong supporter of the premier, Ralph Klein is published in the Edmonton Journal, also a past supporter. 128 The friend Daniel Cohn is a Post-Doctoral Fellow in the University of Alberta department of Political Science, and the author of several works on health-care reform and private health care. He uses common sense market theory to show that the proposal is illogical and will not work.

The Globe and Mail -- Diminished health care, higher costs predicted -- refers to a report by the Caledon Institute of Social Policy which indicates that the proposed bill "will likely result in higher costs to the public treasury and diminished quality of care for patients". 129 It quotes several studies from the USA which show how for profit care has increased cost and compromised care.

The Edmonton Journal reports that an Ontario health policy analyst Michael Rachlis argues that "The Alberta government's private clinic bill is a contradictory law that promotes private hospitals and queue-jumping while claiming to do the opposite". 130 He claims that it is based on little more than "rather blind ideology".

An eminent US analyst Theodore R. Marmor, a professor of public policy, Yale School of Management. writes in the Toronto Globe and Mail. 131 Marmor is a Fellow of the Institute of Medicine and of the National Academy of Sciences and a Fellow of the Canadian Institute for Advanced Research 1987-95. He is the author of Understanding Health Care Reform. He knows what is happening on both countries. He exposes the barrenness of Dr Wooldridge's position. Canada's successful system is a threat to his plans for Australia. I quote Marmor:-

"It is precisely because Canada has good value for money through medicare that it represents an ideological threat to U.S. medical and pharmaceutical interest groups. This is playing out in Canadian medicare's image in the North American media."

Both countries have problems with crowded emergency rooms. Marmor describes how the US media target deficiencies in Canada's system such as crowding in emergency rooms, making the claim that "most experts" agree that Canada's medicare is doomed. "While the reports on Canada used the overcrowding problem to suggest that your medicare is critically flawed, by contrast, parallel reports on U.S. overcrowding did not indict my country's health-insurance arrangements." Marmor then explains that "The image of a troubled medicare program is being amplified in the Canadian media, too. Yet this fearful portrait is strikingly at variance with the research." He produces figures which show that the quality of care is not only better in Canada but also cheaper.

Marmor indicates that the Canadian Institute for Health Information carried out a very well researched study and found that "medicare is a structurally sound program of universal health insurance that largely satisfies those who use it". Figures show that Canadians are satisfied with care but despite the figures are frightened of the future. The institute attributes this to the impact of the media. I quote:- " -- individuals' ratings of the health-care system seem most influenced by the media when their own experience provides little guidance."

Marmor explains the claimed crisis in medicare this way "The answer lies with the habits and stakes of the media, of medical pressure groups, and of political elites."

Marmor also targets deceptive marketing by powerful corporate groups in the USA and their front organisation Citizens for Better Medicare which was studied by Public Citizens (see earlier) I quote Marmor-

A group called Citizens for Better Medicare launched a multimedia campaign "urging American seniors to reject the Canadian model of health insurance and coverage of prescription drugs." ----- The "citizens" turn out to include the U.S. Chamber of Commerce, The National Association of Manufacturers, and the pharmaceutical trade association. Together they claimed that Canadians suffer from a "big, government-run system that rations health care, delays access to treatments, including new technology and medicines, and harms too many patients."

Marmor's conclusion was "For all the criticism of Canada's medicare program, I for one would be delighted to have its manageable problems in place of those in the United States."

An author who wrote a book exposing Premier Klein's conduct in Alberta writes in the Calgary Herald about Stockwell Day, one of Klein's henchmen who is now on the federal political trail. 132 He was one of the driving forces in promoting Klein's health care policies. The author is highly critical of the way in which Day is avoiding the health care debate now. Like Beverly Healthcare he only markets to each group what he wants that group to perceive.

The Toronto Star examines the way in which governments across Canada are deliberately running down medicare, claiming it is unsustainable when a crisis occurs, and then pressing to contract care to private groups at much greater cost.. 141 The politicians go through a process of squabbling to maintain an illusion of supporting medicare and then do nothing. I quote

"In short: deliberate underfunding in key health areas to create maximum distress; deliberate shifting of public funds to private operators, allegedly to alleviate that distress; deliberate gridlock at the political level in order to ensure that medicare can't be fixed. ---- If that doesn't sound like a conspiracy, I say to myself late at night, what does?"

"But a lot also think their governments have decided to screw them on this one - that the fix is in and that the politicians, at the behest of their friends, have decided to destroy the one public program that Canadians truly value."

How strange that the Australian government is doing the same thing. Perhaps these Canadians don't realise what the conspiracy is. Governments in Australia and the USA are both firmly committed to free trade agreements and to cooperating with the USA and multinationals to achieve this. These groups insist that health care be liberalised and be traded on international markets and our governments have agreed. Their support for economic belief system allows them no room to manoeuvre. They dare not disclose this to citizens and the only way they can do this is to run down the public systems until citizens leave them for a corporatised system.

J. SOME EXTRAS -- contents

I have included a few files simply to widen the issues.

A report from Save the Children examining maternal and infant health is interesting. 133 It shows that although poverty is a major determinant for poor maternal and infant health wealth is not as important for good health. Cultural and structural organisation were more important. Countries like Norway, Canada and Australia where public and community health is a structural (medicare) and cultural (community valued) priority outperformed the wealthier United Sates where the market, corporatisation, profit and competition provide the structural and cultural context for health care. Kuwait, the third wealthiest was 50th in maternal well being. Costa Rica the 35th wealthiest ranked 12th above the USA. The USA devotes about twice as much of its much greater wealth as these other countries with a consistently inferior outcome. As the USA is many times wealthier than these other countries the amount of money spent on health care must be even greater than the figures suggest.

The internet and all the potential it offers for humanity has been appropriated as its own by the marketplace. All of its power, its resources and its ability to influence our minds can be used to serve the market and so used in the corporate interest - with the usual disregard for integrity and veracity.

An article in the Washington Post - Behind the Scenes on Health Web Sites - shows how difficult it can be to know what and who are behind particular www sites and what their real motives are. 134 The Post reveals that InteliHealth, which markets itself as "The Trusted Source." runs one of the most popular www sites supplying health care information to US citizens. A careful search of the InteliHealth www pages by the Post failed to reveal the critical information that InteliHealth is owned by Aetna, the HMO whose disreputable and deceptive conduct in the health sector has so enraged US citizens.

The final article - Want a savvy participant in your error-prevention program - points to a way forward. 135 While it sounds a little like marketing it does promote the idea that the community should be far more involved in the day to day operation of the health services. Health is after all a community function, a shared responsibility and a human response to the misfortunes of others. Delegating it to government, and to the market have not worked. Surely it is time for the community to take it back, discuss the issues and then set up a health system in which its members take a day to day interest by running and controlling it - a system where the context promotes care and supports human values, one where the impediments of bureaucratic distance and the dysfunctional search for profit opportunities are eliminated. This idea that patients, the citizens themselves should be directly involved comes from the American Medical Association. Politicians accuse doctors of being resistant to change!


K. LIST OF ARTICLES -- contents


1. Fatal Distraction: Finance vs. Vigilance in our Nations' Hospitals
Editorial by G. Schiff, JGIM, April 2000

2. Medical Errors Higher at For-Profit than Not-for-Profit Hospitals, Harvard Study Finds

3. U.S. Senators Draft Medical Errors Bill
WASHINGTON (Reuters) - Thursday June 15 6:03 PM ET l


5. Elderly Worry About Future Healthcare Costs
Reuters Health May 8, 2000


6. Mayne role to test Smedley GLENDA PRICE TIM BOREHAM Management
The Australian 1 July 2000

7. Mayne chance for full recovery MichaelWest
The Australian 1 July 2000

8. ALA - Chairman's Address to Shareholders
Australian Associated Press November 23, 1999 09:00

9. Alpha healthcare to sell and leaseback four hospitals
AAP NEWSFEED July 5, 2000, Wednesday

10. Dangerous PRACTICE ---- Australia's family doctors are losing the war against the corporatisation of general practice, reports Matthew Fynes-Clinton
Courier Mail 22 July 2000

11. Doctors accept BMW bribes in "kickback culture of creative fraud"
Sydney Morning Herald 31 July 2000

<> 19/1/2000

13. REVESCO -- Half Yearly Report Chairman's Overview 15 March 2000

14. RVS - Acquisition of Perth Surgicentre
Australian Associated Press November 23, 1999 01:91

15. Outsourcing falls 'outside scrutiny' SELINA MITCHELL Government services
The Australian 25 July 2000 p 35

16. Chelmsford group's record defended
Sydney Morning Herald 31 July 2000

17. Damning verdict on nursing homes By KAREN INGRAM
[SMH Home | Text-only index] Date: 25/07/2000

18. Healthcare for older people in residential care -- who cares? by Leon Flicker
Medical J of Australia, 17 July 2000 Vol 173 p 77-79 (Copy not provided)

19. Managed care in the international context by R L Galbally and C Borthwick
Med J Austr 19 June 2000 p 607 (Copy not provided)

20. Managed care -- managed ethics by P A Komesaroff and C G Patterson
Med J Austr 19 June 2000 p 609 (Copy not provided)

21. Fix own ailments, minister tells aged
The Australian 1 August 2000

22. Business leaders pay $5000 a head for the inside track on labour
Sydney Morning Herald 31 July 2000

23. AUSTRALIA Summary of Government Response to The Health Services Policy Review Final Report - Victoria -- November 1999 ( Updated July 24 2000) 


24. Aetna Settlement May Be Landmark
NY Times: April 11, 2000 By The Associated Press

25. Aetna Reaches 'Landmark' HMO Settlement
By Reuters April 11, 2000

26. Aetna Settles Texas Suit Over Doctors' Cost Rules By MILT FREUDENHEIM
NEW YORK TIMES April 12, 2000

27. Physicians Fault Aetna U.S. Healthcare Settlement in Texas By RICHARD A. OPPEL Jr.
New York Times April 21, 2000

28. Aetna CEO Willing To Listen to Bids
Friday April 28, 5:25 pm Eastern Time

29. Aetna Talking To Potential Buyers
NEW YORK (AP) Friday June 16, 4:36 pm Eastern Time

30. Aetna Cutting Medicare HMO Coverage
Reuters: Friday April 28 12:13 AM ET

Los Angeles Times November 11, 1999, Thursday, Home Edition

32. Cost-cutting guide used by HMOs called 'dangerous' ; Doctor on UT-Houston Medical School staff sues publisher
The Houston Chronicle March 05, 2000, Sunday 4 STAR EDITION

33. Insurance Bad Faith ---- 6 Florida RICO, ERISA Class Actions Filed Against Humana
Mealey's Litigation Report: February 15, 2000

34. U.S. says Humana to pay .5 million in settlement
WASHINGTON, June 6 (Reuters)

35. Maryland Fines HMOs $1.6 Million
NEW YORK (Reuters Health)Friday April 28 7:32 AM ET

36. Wisconsin Adopts HMO Review Law
The Associated Press May 13, 2000

37. Rising Premiums Will Boost Ranks of the Uninsured
Reuters Tuesday May 9 1:33 PM ET

38. HMO Promise Not Realized for Chronically Ill By Chris Gearon
WASHINGTON (Reuters Health) Friday June 16 1:48 PM ET l

39. University Affiliates Proving Success of Patient-Centered Health-Care Delivery
ALHAMBRA, Calif.--(BW HealthWire)-Company Press Release -May 11, 2000

40. HMO executives
BANGOR DAILY NEWS (BANGOR, MAINE) April 13, 2000 Thursday 

41. University Hospitals Said in Danger
New York Times May 4, 2000 By The Associated Press

42. Managed Care Leaders Name Forest, SmithKline Sales Forces as "Most Empowered"
NEWTOWN, Pa.--BW HealthWire Company Press Release Friday May 12, 7:59 am Eastern Time

43. Surgical Procedures Bought Online
By The Associated Press May 12, 2000

44. Docs Admit Falsifying Insurance Info
NY Times: April 12, 2000 By The Associated Press


45. HMO patients get clout Republican plan allows for appeals process, but suing would be prohibited
The Detroit News April 13, 2000, Thursday

BestWire April 12, 2000


47. Columbia/HCA in Tentative Settlement With US By David Brinkerhoff

48. Alaska, U.S. split $1 million in Medicaid case
Reuters: Monday April 10, 6:43 pm Eastern Time

The Tennessean May 23, 2000, Tuesday CITY EDITION



50. Bigger isn't better; Our first Post-Acute-Care Survey finds that larger firms are faring worst in turbulent industry
Modern Healthcare July 24, 2000, Monday 24/7/2000

51. Medicare cuts hurt nursing facilities;
The Post and Courier (Charleston, SC) June 11, 2000, Sunday, SUNDAY EDITION

52. President Clinton will propose boosting payments
The Wall Street Journal WASHINGTON 06/19/2000 Page A3

53. Health Providers and Elderly Clash on Medicare Funds By ROBERT PEAR
The New York Times May 15, 2000

Daily News (New York) August 1, 2000, Tuesday SPORTS FINAL EDITION

55. Nursing Home Nightmare? Report: Understaffed Homes Endanger
The Associated Press NEW YORK, July 23

56. U.S. Nursing Homes Badly Understaffed, Study Finds
WASHINGTON -- Monday, July 24, 2000 ?? SOURCE

The New York Times July 23, 2000, Sunday, Late Edition - Final

58. Bay nursing homes fail standards test ---- By Marsha Ginsburg
San Francisco Examiner 8 June 2000

59. For quality care
St. Petersburg Times, published July 29, 2000

60. Nursing Homes: Stronger Complaint and Enforcement Practices Needed to Better Ensure Adequate Care, by William J. Scanlon, Director, Health Financing and Public Health Issues, before the Senate Special Committee on Aging. Mar. 22, 1999 (Summary of GAO report))

61. Lax enforcement an issue for nursing-home scandals nationwide ---- It's been decades since the industry has dealt with corruption of this magnitude.By RANDY KREHBIEL World Staff Writer
Tulsa World 7/16/00

62. Nursing Home probe: History of state's nursing homes repeating By ZIVA BRANSTETTER World Assistant City Editor
Tulsaworld --- 7/16/00

63. Notes from a tour of purgatory's barracks ---- The first thing you notice is the smell. By Paul G. Labadie
Publication from USA Today 4/27/2000 Page 17A

Daily News (New York) August 2, 2000, Wednesday FINAL EDITION

65. State issues severe warnings to 14 nursing homes
The Associated Press State & Local Wire August 3, 2000, Thursday, BC cycle

66. NURSING HOMES Inspections draw blame

67. Okla. Officials Arrested in Probe By RON JENKINS
The Associated Press??? Date Apr/May 2000

68. Senator Bond Renews Demand HCFA Investigate Failed Monitoring of Missouri Nursing Homes
WASHINGTON, June 21 /U.S. Newswire/

Federal News Service July 25, 2000, Tuesday

70. CASE: Regulations: Compliance Program Guidance for Nursing Facilities
Health Care Fraud Litigation Reporter April 2000

71. An Act to Impose Minimum Staffing Requirements for Nursing Home
Arkansas nursing home staffing law. 30/6/2000

72. Concerned nursing home administrators pack board meeting By Bonnie Harris
The Indianapolis Star July 6, 2000

73. Maryland Lt. Gov. Kathleen Kennedy Townsend Convenes National
Solutions Summit on Elder Care
U.S. Newswire May 31, 2000, Wednesday

74. State to increase Medicaid benefits
Las Vegas Review-Journal (Las Vegas, NV) July 26, 2000 Wednesday FINAL EDITION

75. An industry on the brink of the truth?
The Tampa Tribune May 9, 2000, Tuesday, FINAL EDITION

76. Beverly Enterprises holds annual meeting
The Associated Press State & Local Wire May 26, 2000, Friday, AM cycle

CBS News Transcripts May 18, 2000, Thursday

78. Homes may be in trouble Head of care facility group says many may go bankrupt
Charleston Daily Mail July 11, 2000, Tuesday

79. Georgia nursing homes suffer financial problems, employee shortage
The Associated Press State & Local Wire July 9, 2000, Sunday, BC cycle


81. Attorney general, activist tackle elder abuse By Catherine Moy
Daily Republic ??? exact DATE -- June 2000

82. Too Much, Too Soon Halts Assisted-Living Boom
The New York Times May 28, 2000, Sunday, Late Edition - Final


83. The Associated Press April 22, 2000, Saturday, BC cycle
Nursing home companies, residents struggle in daily crisis

84. Nursing homes and society's need to face the hard facts about aging
The Tampa Tribune April 2, 2000, Sunday, FINAL EDITION


The Palm Beach Post May 26, 2000, Friday, FINAL EDITION

The Florida Times-Union (Jacksonville, FL) June 4, 2000 Sunday, City Edition

88. Punishment comes too late, critics say Others tout Florida's aggressive stance
The Florida Times-Union (Jacksonville, FL) June 4, 2000 Sunday, City Edition

89. Care manager says it might leave Florida
Sarasota Herald-Tribune July 12, 2000, Wednesday, ALL EDITIONS

90. State panel tackles care crisis; --- Its mission comes as state nursing homes face bankruptcy from skyrocketing liability insurance.
Sarasota Herald-Tribune July 16, 2000, Sunday, ALL EDITIONS


91. Nursing home gets ultimatum
The News and Observer (Raleigh, NC) April 27, 2000 Thursday, FINAL EDITION

92. Report details wrongs in care
The News and Observer (Raleigh, NC) May 4, 2000 Thursday, FINAL EDITION

93. State: Vencor has 'deficiencies'
St. Petersburg Times May 31, 2000, Wednesday

94. Can Vencor regain health? The suspense is building One scenario has creditors going after Ventas' assets
The Courier-Journal (Louisville, KY.) May 28, 2000, Sunday MET:METRO


95. State inspection finds uncorrected problems, new issues
The Associated Press State & Local Wire April 20, 2000, Thursday, BC cycle

96. Regulators had cited care center; Nursing home official has said beating death couldn't be foreseen
The Dallas Morning News July 25, 2000, Tuesday THIRD EDITION

97. IHS founder to step down as chain CEO Balto. Co. company filed in February for reorganization Medicare cuts cause losses New York consultant to take over as 'chief restructuring officer'
THE BALTIMORE SUN July 28, 2000, Friday ,FINAL

98. $50 million package for IHS founder -- Departure deal subject to approval of Bankruptcy Court --- Loans would be forgiven --- 'He should be suffused with guilt,' one critic comments
THE BALTIMORE SUN July 29, 2000, Saturday ,FINAL


99. State takes over nursing home Health, safety cited in Bellevue
The Seattle Times April 30, 2000, Sunday Final Edition


101. State fines Muscle Shoals nursing home $92,500
The Associated Press State & Local Wire May 10, 2000, Wednesday, AM cycle

102. County official says nursing home where two died was unprepared for heat wave
The Associated Press State & Local Wire June 18, 2000, Sunday, BC cycle

103. Facility Fined $141,000; State says 2 died from lack of care
The San Francisco Chronicle JULY 29, 2000, SATURDAY, FINAL; PENINSULA EDITION

104. Suit filed against nursing home in 88-year-old's heat wave death
The Associated Press State & Local Wire August 4, 2000, Friday, BC cycle

105. Sun Healthcare selling homes in Europe
Albuquerque Journal May 18, 2000, Thursday

106. Sun CEO gets raise despite company's downturn
The Associated Press State & Local Wire June 18, 2000, Sunday, BC cycle

107. Sun CEO's Pay Rose Amid Loss Turner Made Nearly $1.9 Million for '98
Albuquerque Journal June 18, 2000, Sunday

108. Sun loss tops $1 billion Sun Healthcare has reported losses exceeding $1 billion for 1999.
The Associated Press State & Local Wire July 15, 2000, Saturday, BC cycle

109. Sun Healthcare Group Appoints New Chairman and New Chief Executive Officer
PR Newswire July 13, 2000, Thursday

110. Chairman of Sun Healthcare resigns
The Associated Press State & Local Wire July 13, 2000, Thursday, BC cycle

111. Sun Healthcare CEO Turner Will Resign
Albuquerque Journal July 14, 2000, Friday

112. Sun founder announces intention to step down By Elise Nakhnikian

113. Sun: Looking at long road back to health
The Associated Press State & Local Wire August 7, 2000, Monday, BC cycle

114. Sun's torrid pace lets some workers shine, burns out others
Albuquerque Tribune October 08, 1998, Thursday

115. Sun revolves around health care's changes
Albuquerque Tribune October 08, 1998, Thursday

116. Andy Turner wants the government out of health care, Period,
New -Mexico Business Journal. April. 1996 Vol 20; No 4: pg 10

117. Watch them grow, And grow.
New 'Mexico Business Journal, April. 1996 Vol 20; No 4; pg 15


118. Genesis Health Ventures Files for Bankruptcy
The New York Times June 23, 2000, Friday, Late Edition - Final

119. Firm decides it will close troubled Bayside nursing home; Audubon center won't challenge state license revocation; 161 remaining residents must move to other facilities
Milwaukee Journal Sentinel April 11, 2000 Tuesday FINAL EDITION

The Richmond Times Dispatch July 26, 2000, Wednesday, CITY EDITION 26 July 2000

121. No Contest Plea in Elder Abuse Case Guardian agrees to sell or close two care facilities in South Bay Julie N. Lynem, Chuck Squatriglia, Chronicle Staff Writers
CHRONICLE SANTA CLARA CO -- Thursday, May 25, 2000

122. Local rehabilitation center to close after state citations South Park Rehabilitation and Nursing Center had been cited three times in the past, but had corrected previous problems
Corpus Christi Caller-Times July 22, 2000, Saturday

123. Jury awards $3 million to family of deceased nursing home resident
The Associated Press State & Local Wire July 15, 2000, Saturday, BC cycle

Source unknown 10 July 2000


125. Holding Patients Hostage ---- Executive Summary
Public Citizen investigative report ?? 2000

126. Donations Track Doctor Bill Votes By JONATHAN D. SALANT
WASHINGTON Associated Press Writer July 3, 2000

127. House and Senate Members to Release Public Citizen Study Unmasking Drug Industry Front Group
For Immediate Release: June 19, 2000


128. Bill 11 won't reduce costs or waiting lists Daniel Cohn
The Edmonton Journal, Friday 14 April 2000

129. Diminished health care, higher costs predicted ANNE McILROY
Parliamentary Bureau Chief, The Globe and Mail, Wednesday, April 19, 2000

130. Health policy analyst contests Bill 11's premise Michael Rachlis points to problems in Klein's argument ----- Allyson Jeffs, Provincial Affairs Writer
The Edmonton Journal, Saturday 8 April 2000

131. An American diagnosis: If it ain't broke, don't fix it THEODORE MARMOR
Toronto Globe & Mail: Monday, May 15, 2000

132. Stockwell Day's convenient amnesia GILLIAN STEWARD
Calgary Herald Tuesday, July 18, 2000


133. Study: Rich Nations Don't Always Take Care of Moms By Maggie Fox, Health and Science Correspondent
Reuters Tuesday May 9 11:51 AM ET

134. Behind the Scenes on Health Web Sites
Washington Post 15 May 2000

135. Want a savvy participant in your error-prevention program? Put a consumer on your team!
ISMP Medication Safety Alert May 17, 2000 issue


136. Vencor and Office of Inspector General Agree On Quality Improvement Plan in Corporate Integrity Agreement
Business Wire August 8, 2000, Tuesday

137. Troubled health care company Vencor Inc. reaches agreement with federal government
The Associated Press State & Local Wire August 9, 2000, Wednesday, BC cycle

138. Employees rage against nursing home's twilight
The Boston Herald August 8, 2000 Tuesday ALL EDITIONS

139. Pay now, or pay more later, Wimer says of reimbursements
Albuquerque Tribune August 7, 2000, Monday

140. From boom to bust --- Sun founder leaves; firm still in bankruptcy
Albuquerque Journal August 7, 2000, Monday

141. Opinion Story: Is there a plot to kill medicare? by Thomas Walkom
Toronto Star, April 4, 2000


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