What comes after the fines? Which is worse?
Now that the initial round of federal legal proceedings against St. Joseph Hospital London and King’s Daughters Medical Center (KDMC) over false billing, improper financial relationships with physicians, or provision of unnecessary cardiac services has closed, I have largely lost track of where things stand. Civil proceedings by patients against the hospitals and several physicians are ongoing in Boyd and Laurel County courts where plainiff and defense attorneys have been busy. Surely the federal monetary settlements and ongoing lawsuits have damaged the reputations and finances of the two institutions. The heavily promoted cardiac surgery program in London was closed. Cardiac patient volumes at KDMC have fallen to the point that they are referred to as an issue in its bond ratings. At least one physician working at St. Joseph London was sentenced to prison. Two other physicians from that hospital recently signed settlements of their own with the U.S. Department of Justice paying $360,000 to settle allegations that included payments for illegal referrals and having entered “sham agreements” that concealed their financial relationships with St. Joseph. Other hospitals and physicians that have similar contractual relationships must certainly be scrambling to make repairs.
Corporate Integrity Bludgeons.
I recently obtained a copy of KDMC’s 61-page Corporate Integrity Agreement (CIA) made with the Department of Health and Human Services Office of Inspector General as part of its federal settlement. St. Joseph agreed to what must be similar CIA language. Indeed, previous experience with CIAs by St. Joseph London’s new senior officer was emphasized in a recent announcement of his hiring.
I was not fully aware, and was frankly stunned by the incredible scrutiny and scope of obligation placed on hospitals by such agreements. For at least the next three years, virtually all of the leadership and employees of KDMC, as well as people who provide clinical or billing services are covered by the agreement. Both internal and external compliance officers, committees, and consultants must be arranged. These include a board compliance expert, board-certified director of the cardiac catheterization laboratory, a peer-review consultant, an independent review organization, management accountability and certification functions, and physician executives to oversee clinical matters.
There are pages and pages of training, certification, and reporting requirements with stiff fines and other penalties for failure to comply. These include the following:
a. Compliance Officer;
b. Compliance Committee;
c. Board of Directors compliance obligations;
d. written Code of Conduct;
e. written Policies and Procedures;
f. training of Covered Persons, Relevant Covered Persons; Arrangements Covered Persons, Board Members, and Executive Management;
g. Focus Arrangements Procedures;
h. Disclosure Program;
i. Ineligible Persons screening and removal requirements;
j. notification of Government investigations or legal proceedings; and
k. reporting of Reportable Events.
Some will see these requirements as excessive or onerous. However, if we leave it to the court and tort systems to oversee the financial and professional integrity of healthcare, why should we be either surprised or indignant at such a result? This is what courts do. Sadly, the problems that led to such settlements are very real and not limited to Kentucky.
Other hospitals shaking in their boots?
No doubt the cardiology services of every hospital in Kentucky, or indeed the nation, is vulnerable to the much cited “chilling effect” of these settlements, or concerned about the impact on their institutions should they too come under such a regulatory microscope. It will be instructive to see what happens to the volume of cardiac services reported to state and federal governments in the next few years. To the extent that hospitals or communities see cardiology as profit centers, the earth may have shifted for them.
The effects of such medical practice misadventures are not limited to hospitals or their medical staffs. Healthcare organizations are major employers in most communities– indeed the largest employers in some. People can be laid off. Building plans can be disrupted. Some communities, including Louisville, have singled out healthcare as a major engine of economic development. Currently more than 18% of the U.S. gross national product goes into healthcare! This economic multiplier chain can be disrupted. The costs associated with malpractice and other legal and compliance system failures only amplify the financial and emotional damage to communities. Trust in our fellow citizens and in our healthcare and legal institutions is compromised. There is obviously a lot more at stake for us to lose before these unfortunate matters are concluded, and there is all the more reason to prevent the repetitions still occuring around our country.
As always, if I have made an error of fact in this article, let me know.
Peter Hasselbacher, MD
Emeritus Professor of Medicine, UofL
October 29, 2014