Corporate suits make RMs more valuable

The potential for more corporate lawsuits such as the one involving Tenet Healthcare Corp. and Community Health Systems should highlight the value of the risk manager (RM) in any healthcare organization, says Sheryl R. Skolnick, PhD, senior vice president of CRT Capital Group in Stamford, CT, who has studied Tenet for Wall Street.

This kind of case shows important the job of a risk manager is to the organization," she says. "For hospital management, the lesson is that if your risk manager says you shouldn't be doing something the way you're doing it, somebody should sit up and listen. Because somebody, someplace out there is going to be watching you, and it's not going to be just the very busy Office of Inspector General or the very busy fiscal intermediary."

The Tenet lawsuit has broken the ice on such provider-to-provider challenges, Skolnick says. What was previously unheard of in the healthcare arena might become more common now because Tenet has removed the taboo of making charges that might bring regulators and auditors down on a competitor, she says.

The move toward computerized physician order entry (CPOE) will only increase the risk, Skolnick says. CPOE will promote the standardization of care, and that change means that healthcare providers must ensure the system is directing clinicians properly.

"It becomes incumbent upon the risk manager to ensure that those evidence-based protocols are updated with robustness, meaning you are really 100% sure at any time that you are using the right protocols," Skolnick says. "You should be doing that today, of course, but the automation of the process makes it that much easier for the regulators and investigators to look over your shoulder and ask why you didn't update."

Suit shows good compliance needed

The lawsuit involving Tenet Healthcare Corp. and Community Health Systems could open up a whole new area of risk for health care providers, says Douglas B. Swill, JD, a partner with the law firm of Drinker Biddle in Chicago and chair of the firm's Health Law Practice Group.

Once such a lawsuit is filed, the Department of Justice is likely to investigate, along with the fraud units of Blue Cross and Blue Shield, state Medicaid offices, and other groups that might have overpaid for services,

"We haven't really seen this type of situation before, in which a compliance issue comes out during the disclosure process of a merger bid," he says. "There have been claims of misrepresentation and litigation, but this is different because it is raising a very significant compliance issue."

The situation reinforces the need for a solid compliance program, Swill says. He recommends that all providers investigate their observation and admission rates now, because the Tenet lawsuit might bring more focus on that issue from regulators and auditors.

Risk managers also should be closely involved with the preparations for any corporate transactions, Swill says. "If you're about to engage in a strategic transaction — an affiliation, a merger, or a sale — you need to ensure that your house is in order by undertaking the due diligence before you start handing over information to the other side," Swill says. "A lot of times hospitals won't do that. They don't have their own documents reviewed by counsel before transmitting them to the other side, only to find out that the other side's counsel or consultants have found compliance issues."

Sheryl R. Skolnick, PhD, senior vice president of CRT Capital Group in Stamford, CT, who has studied Tenet for Wall Street, points out that hospital utilization data is far more available now than in the past, which allows competitors, analysts, consultants, and anyone else to analyze a hospital's information in search of potential fraud.

"Once that cost data is reported, your actions are going to be scrutinized by people who may not understand the rigors and the necessity of coding a certain way or treating a patient a certain way," she says. "The level of scrutiny has changed dramatically in the last 20 years, and especially in the last five or six. This means that the need for documentation, your evidence of why you made these decisions the way you did, is more important than ever." n