The Argonaut, 7/24/03

Marina area:
Tenet Healthcare served subpoenas in doctor relocation agreement case

The U.S. attorney in Los Angeles is investigating the propriety of physician relocation agreements at seven Southern California hospitals under the operation of Tenet Healthcare Corporation — including Daniel Freeman Marina Hospital.

The U.S. attorney issued subpoenas to the company Tuesday, July 15th, according to Tenet.

Tenet says it will comply with the subpoenas, which seek information relating to physician relocation agreements at the hospitals since 1995.

In a related action, a San Diego grand jury handed down an indictment Thursday, July 17th, of Tenet and administrators at the Tenet-owned Alvarado Hospital Medical Center in San Diego, accusing the defendants of using "kickbacks" to entice physicians to send patients to that hospital.

The alleged kickbacks were payments to a third party for referring physicians for relocation to the Alvarado hospital.

Tenet defends its relocation agreements, in which physicians are given income guarantees and relocation assistance and "start-up" funding in return for affiliating with a Tenet-owned hospital.

Tenet says the agreements are needed to attract good physicians to areas that are remote or where the cost of living is high, such as Southern California.

Other local hospitals under investigation for questionable relocation agreements are Centinela Hospital Medical Center in Inglewood; Daniel Freeman Memorial Hospital in Inglewood; Brotman Medical Center in Culver City; and Century City Hospital in Los Angeles.

The government alleges that the relocation agreements are illegal because physicians are induced to refer patients to a particular hospital that may not be in the best interest of the patient.

Tenet says that approximately 42,000 physicians currently have admitting privileges at Tenet's 114 hospitals in 16 states.

Tenet issued the following statement regarding the relocation issue:

"Physician relocation agreements are a common and accepted practice used by hospitals around the country to meet a demonstrated need in their communities for additional or specialized resources.

"Typically, hospitals pay a portion of a physician's cost to relocate from one community to another plus income guarantees for a set period of time, usually one year.

"In return, physicians typically commit to provide health care services in the local community for at least three years. The agreements permit the physicians to refer patients to any hospital, not just the facility that helped them to relocate. Such agreements are generally permitted under rules promulgated by the U.S. Department of Health and Human Services."