Columbia hunkers down as more charges fly

Embattled hospital giant may sell home care unit

There is absolutely no truth to the rumor that telephone receptionists at Columbia/HCA Healthcare headquarters are answering the phone by shouting "Incoming!" But the Nashville, TN-based hospital giant is, after all, under heavy bombardment.

In recent weeks, federal prosecutors have said Columbia officials may have tried to destroy documents related to the government’s criminal investigation into possible Medicare fraud; current Columbia/HCA employees are cooperating with the federal inquiry; and federal investigators have wired witnesses with hidden microphones, taping conversations with Columbia officials. It has been reported that the company may face prospects of paying as much as $1 billion in fines.

Recently, the Justice Department has stepped up its investigation of Columbia for alleged Medicare fraud, including the indictment of three midlevel Columbia managers by a federal grand jury on charges of improperly inflating Medicare reimbursement claims, and federal prosecutors’ statement that Columbia itself is a target of their criminal probe. The three executives pleaded not guilty in federal court in Tampa, FL, but could face more than $1 million in fines and 25 years in prison if convicted.

Federal prosecutors in Florida also are investigating whether Columbia improperly shifted some hospital operating costs to its home health operations. The probe is focusing on Columbia’s relationships with Olsten Health Management, AbleCare, and ResCare.

Meanwhile, Columbia has announced plans to sell off its home health division, which comprises about 570 home health locations, most of them hospital-based. New CEO Thomas Frist Jr. has said Columbia will submit a plan for the divestiture of the $1.2 billion unit to the Justice Department, but neither the Justice Department nor Columbia will elaborate.

A Justice Department spokeswoman would only say, "We don’t comment at all on any ongoing investigation."

However, The Wall Street Journal (Aug. 20, 1997) reported that Columbia has begun talking with potential buyers. The story named as interested shoppers Welsh, Carson, Anderson & Stowe, a New York venture firm, as well as large providers Integrated Health Services of Owings Mills, MD; American HomePatient of Brentwood TN; HealthSouth, a Birmingham, AL, rehabilitation company; and Atlanta-based Magellan Health Services.

Says Burtonsville, MD, home health care attorney Elizabeth Hogue: "I don’t know who will buy it, but if I had to bet, I’d say Tenet is the front runner."

Only a few weeks ago, Tenet Healthcare of Santa Barbara, CA, reportedly was considering a buy-out of Columbia, but has maintained a low profile since.

But no matter who purchases Columbia’s home care operations, whether in toto or piecemeal, there remains a question of liability for whatever fines the company would be subject to if it is eventually found guilty of any wrongdoing.

According to Hogue, "You can make an asset purchase only and leave the liabilities behind. But it would be a huge internal mess to clean up, and that would drain resources."

The Justice Department spokeswoman emphasizes, however, that fines or not, Columbia is in for a long battle.

"That’s all stuff that gets worked out. There’s not a pat answer. But the investigation doesn’t stop. Nothing goes away," she says.