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Back To Vidyya Analysts Report That Hospitals Are Less Likey To Be Scrutinized Under Bush Administration's Watch

Less Government Scrutiny Expected In The Next Four Years Than Seen In The Last Eight

U.S. hospitals should see less government scrutiny in the next four years than they did in the last eight, securities analysts said.

When President-elect George W. Bush takes office in January, Banc of America Securities analyst Gary Taylor said, the regulatory environment should be more favorable to hospitals than it has under President Clinton.

Merrill Lynch analyst A.J. Rice said the Clinton administration took a very ``confrontational'' approach to hospitals.

``I don't see the scrutiny going away,'' he said, ``but I see the tone changing of how the investigations are conducted.''

Marking the end of what they called the Clinton administration's aggressive oversight of the hospital business, analysts said, was HCA Healthcare Corp.'s $95 million settlement of criminal charges with the Department of Justice, in addition to $745 million in a previously announced deal to resolve several civil charges.

HCA's Columbia Management Cos. and Columbia Homecare pleaded guilty to several charges related to Medicare billing and the company's outpatient laboratory and home health operations under the settlement.

HCA, which before May was known as Columbia/HCA Healthcare, was the target of a 1997 FBI raid at several offices, in which authorities seized records about billing for Medicare, the federal program that provides health coverage for 39 million elderly.

In the government's case with HCA, Taylor said, ``They didn't find what they claimed to be widespread fraud.''

Still, former Columbia HCA executives Jay Jarrell and Robert Whiteside were found guilty of Medicare fraud, but are free pending appeal.

Jarrell, former head of Columbia-HCA's southwest Florida division, was ordered to serve 33 months in prison, while Whiteside, a former director of reimbursement, was sentenced to two years. Both also face substantial fines and restitution. One other executive was acquitted and the jury split on another executive who later signed a plea agreement with the government to avoid another trial.

The Columbia/HCA investigation prompted other hospitals to become stricter with following Medicare's rules, Taylor said.

HCA was one of many health concerns that have paid fines or entered settlements with the federal government, but HCA's was the largest.

Firms entering government settlements during the Clinton Administration include kidney dialysis companies Renal Care Group Inc. and Fresenius Medical Care AG, nursing home operator Beverly Enterprises Inc., Quorum Health Group Inc., and managed care firm Humana Inc.

Under the Bush administration, the health-care industry will still have to contend with ``whistleblower'' lawsuits that allege violations. The government has the option to participate in those suits, if they are deemed to have enough merit.

Given the thousands of pages and the complexity of Medicare rules, Taylor said, ``The government could go into any hospital and find violations.''

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Editor: Susan K. Boyer, RN
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