I wrote to FIRB on 19 Jan about the
court cases by patients and the documents I possessed from the
Connecticut fraud inquiry which I knew was soon to be settled. I sent
a short summary of the patient cases but I did not send them the
original documents indicating that I would send them if they were
doing anything about Sun Healthcare's presence in Australia. I
pointed out the human problems of basing a health service on
corporate productivity and efficiency. At the time the Productivity
Commission was examining aged care.
19 January 1999
Mr A Hinton
Foreign Investment and Review Board (FIRB)
The Treasury Building
Dear Mr Hinton,
I have recently acquired the following documents.
COURT DOCUMENTS:- I am now in possession of the court documents from five typical court actions taken against Sun facilities in California. All of them allege that Sun deliberately understaffed and provided substandard care in order to boost profits. Given the extent of the information available about the conduct of corporate chains and of Sun Healthcare, it seems very likely that there is substance to them. What the litigants describe is exactly what you would expect for the sort of policies advocated and practiced by Sun Healthcare and other chains. Government investigations confirm the frequency of such practices and the consequences. There are so many court actions like this across the USA that corporate chains are becoming desperate. In Florida investigations have clearly linked problems exactly like those described to corporate practices. In an attempt to protect themselves chains in Florida are pressing the state government to pass legislation which would give them the same sort of protection enjoyed by US Managed Care companies under the unfair ERISA legislation. They are trading greater government oversight in return. Government oversight has not worked in the past. With the increasingly close links between business, government and bureaucracy it is even less likely to do so.
These documents are bulky but follow a pattern. I have therefore written an explanatory introduction and then summarised the content and the thrust of the allegations, quoting selected passages. I attach this.
CONNECTICUT FRAUD:- I am also in possession of documents served on Sun Healthcare during the fraud investigations in Connecticut and an audit report for the Connecticut authorities. This material contains a large number of accounting documents, dealing with many millions of dollars. I do not have the accounting skills to make any sense of it, but the thrust of the material seems to be that Sun claimed expenses and other costs amounting to many millions of dollars to which they were not entitled. Someone will need to verify this and calculate the amount. The audit was prepared by independent auditors after examining state accounts and material submitted by the company in response to court orders. They even discussed them with the company who were clearly given every opportunity to state their position.
EFFICIENCY AND PRODUCTIVITY:- I am particularly concerned at the prospect of Sun Healthcare operating in an environment where the provision of aged care is based entirely on objective measurable data and concepts of productivity and efficiency. While clearly we do not want to be inefficient or unproductive, nor to ignore objective data, such an environment provides companies like Sun Healthcare endless opportunities to justify and rationalise their practices to the uninformed and gullible.
I am concerned at how one can measure the productivity of a nurse who spends an hour or more each day for a week chatting to a confused, anxious and disoriented elderly admission, someone who feels control of his environment and his life slipping away. If the nurse can succeed in helping him to grasp and organise his new environment he will become a willing and useful participant in the nursing home community, someone visited and enjoyed by his family. The alternative, confusion, agitation, sedation, immobility, risk of pressure sores, hypostatic pneumonia and early death.
Then there is the carer who spends 5-10 minutes chatting to a depressed lady about her children and the latest successes of her grandchildren as she fills her glass of water, brings tea or encourages eating. She is rekindling the lady's interest in life. Perhaps the next time the family come the the patient with the carers assistance will engage the family so extending this interest, encouraging more frequent visits by the family - steadily lifting the depression.
I ask you to consider how such services will be evaluated by a "Productivity Commission" and how they will be affected by management decisions based on objective measures of efficiency. Contrast what I have described with the content of the allegations made about Sun Healthcare facilities in the court actions summarised in this material. Sun has built its profits and its credibility on what it claims are increased efficiencies, cutting the fat to increase productivity.
How many of these patients received the sort of attention I have described? Would the outcomes have been different if they had? Can we seriously consider an aged care or health care system designed to maximise resources and utilise them efficiently - a system where expenditure must be justified by demonstrable productivity. How would the "manager" of the unit where staff provide the care I have described justify his/her staffing requirements? Can we measure our humanity in corporate terms such as efficiency, productivity and profit?
AVAILABILITY OF DOCUMENTS:- I continue to receive information about corporate conduct in the USA on a regular basis, but simply cannot send all this material to all who might need it. I simply cannot go on sending so much material into an unresponsive void.
If the court documents would be of use to you (ie if there is any prospect of your examining them and acting) then I will send you copies. Similarly if you wish to submit the Connecticut documents to your accountants and/or your lawyers for advice then I can provide copies.
Once again I am quite willing to make any material in my possession available to you, if and when you decide to do anything about Sun Healthcare in Australia.