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
``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
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
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.''