NEW YORK TIMES
By REED ABELSON
Tenet Healthcare
, one of the largest for-profit
hospital chains, said yesterday
that one of its
information for an investigation into unnecessary surgeries, including
open-heart
surgery, and possible Medicare billing fraud.
Federal officials say there is
reason to believe that "many known and
unknown patients have been victims of a scheme to cause patients
to undergo
unnecessary invasive coronary procedures," including artery
bypass surgery
and heart valve replacement surgery, according to an affidavit
by the F.B.I.
About 40 federal agents searched
and the offices of a cardiologist and cardiothoracic surgeon
on Wednesday
morning. The two doctors have not been charged with any crime.
Tenet, which waited a day to
disclose the news, said it had no reason to
believe the accusations were true. "We are fully
cooperating," said Harry
Anderson, a company spokesman, who
also said Tenet was conducting its own
investigation. "We're quite concerned about this."
While Tenet said it thought the
federal investigation was limited to the two
doctors, it was unclear whether the hospital or the company might
also be
involved. The
whether the investigation involved
said the hospital's chief executive was told of at least one
patient's
concerns last June.
The company's stock lost more than a quarter of its value
yesterday after
news of the raid became known. It closed at $28.75 a share,
down $10.22.
The news raised concerns over whether the raid signaled
broader concerns
about Tenet and its oversight of its network of hospitals,
analysts said.
"That's the question of the
hour," said Sheryl R. Skolnick, a managing
director at Fulcrum Global Partners, a
recommended investors sell the stock as soon as reports about the raid
began
to circulate.
The timing of Tenet's announcement, which came a day after
the raid and
after the company met with analysts, also raised questions about
Tenet's
handling of the news, which was disclosed in a news
release from federal
authorities on Wednesday.
While Tenet said the news was not material,
"obviously, investors thought it
was," said Rita Freedman, an analyst with PNC Advisors.
"This whole incident does call investors' attention to
the question of the
integrity of management," she said.
The investigation, which also
involves the Office of Inspector General at
the Department of Health and Human Services, is focused on the
activities of
two doctors at
cardiology, and Dr. Fidel Realyvasquez Jr.,
the hospital's chairman of
cardiac surgery.
The doctors referred questions to
their respective lawyers.
"This is clearly a dispute as
to the appropriateness of medical
investigative procedures and to what degree a doctor has discretion to
provide his patients with the best care possible," said
Malcolm Segal, a
lawyer in
cooperating fully with federal authorities, Mr. Segal said, and
expects to
be able to convince them that he was doing what he thought
was best for
those patients. John Reese, Dr. Moon's lawyer, declined to
comment.
surgeries this year, according to the F.B.I. affidavit, citing a
firm
retained by the hospital to find a new director of cardiovascular
operating
rooms. The hospital is also described as one of Tenet's most
successful
hospitals.
Tenet emphasized that any decision
to perform surgery would be made by the
physician, not the hospital.
"We don't have an independent
means to judge medical necessity," said Mr.
Anderson, who described the
doctors as "two very successful cardiologists in
private practice" who are not employees of the hospital or
Tenet.
If the accusations of unnecessary surgery are proved to be
true, analysts
said, it raises questions about the hospital and the company's
oversight of
those doctors. One pertinent question, according to Ms.
Skolnick, the
analyst, is whether the accusations might be part of
a systemic problem
caused by a company culture that placed too much
importance on the growing
volume of procedures in lucrative fields like
orthopedics and cardiology.
"There is no question that
these two doctors generated increasing volume at
program, Mr. Anderson said. But he emphasized that the hospital
and Tenet
would not have necessarily viewed the higher volume as a warning
sign, given
the growing prevalence of heart surgeries nationwide. He said
the company
would be reviewing its internal policies governing the controls
in place to
prevent such abuses as part of its own investigation.
But there is some indication that
hospital executives were aware of
concerns, according to the F.B.I. affidavit and an interview with
the lawyer
representing one patient who says Dr. Moon recommended bypass surgery
that
two surgeons and four cardiologists later said was
unnecessary.
The patient, the Rev. John Corapi, met with
late June to express his concerns about Dr. Moon, according to
Dugan Barr,
the patient's lawyer. The executive supported Dr. Moon, he
said.
One medical professional also told
federal authorities that many physicians
and administrators at
procedures" but that the doctors were extremely powerful because
of the
revenue they generated, according to the affidavit.
Redding officials referred calls
to Tenet, and Mr. Anderson said he could
not comment on the specific accusations. But he said the
company would be
Mr. Anderson also defended the company's decision not to
alert investors
about the raid until yesterday afternoon. Tenet, which has come
under
criticism for not explaining more fully why so many of
its patients are
considered exceptions under Medicare reimbursement, had
met with analysts
yesterday. Mr. Anderson said the company was aware of
the raid but did not
consider it material information that needed to be
shared with the public,
especially because Tenet was not aware of the decision
by federal
authorities to issue a news release.