The Orange County Register

Wednesday, November, 5, 2003

Tenet's O.C. hospitals could be hurt.

Dispute with insurer Blue Cross may eventually disrupt local patient care, though it's far from a certainty.

By BERNARD J. WOLFSON, NANCY LUNA and MAYRAV SAAR


The fight between health-care giants Tenet Healthcare Corp. and Blue Cross of California escalated late Monday, with Tenet threatening to sue the insurer unless it rescinds its decision to cut off Tenet's Modesto hospital after alleging that doctors there performed unnecessary heart bypass operations. With all the trouble Tenet faces - multiple investigations and the looming expansion of Blue Cross' audit - analysts and patients may be wondering what's next:

Q. What does this latest trouble mean for Tenet's ability to continue operating?
A. That depends on whom you ask. Analysts on Wall Street take a pretty dim view of Tenet these days, with some even predicting the company will not survive. The dispute with Blue Cross is likely to raise the stakes significantly, especially if other insurers start questioning medical care at Tenet hospitals and refusing to pay bills - or even cutting business ties. UBS analyst Kenneth Weakley is not predicting the demise of Tenet, but concedes the company "has a host of clinical, operational and legal issues facing it - the likes of which we have not seen on the hospital side in a very, very long time." But Tenet spokesman Steve Campanini says, "It would be premature to start closing the doors. It is the intention of management to resolve these issues."

Q. What are the chances that Blue Cross could cut off Tenet hospitals in Orange County?
A. There's no way to know, but it's not impossible. Analysts believe Blue Cross is serious about auditing other Tenet hospitals and could well take action against them if it finds evidence of more unnecessary surgeries. "I definitely think this situation could expand," says Maryann Hennessey, an analyst at Criterion Research Group. Certainly, if a similar conflict did arise with Tenet in Orange County, it could cause disruption: Blue Cross insures 580,000 people here, and Tenet has nine hospitals - nearly a third of the county's market share.

Q. What if other insurers follow Blue Cross' lead?
A. It would greatly magnify the impact on patients. Analyst Weakley says insurers "are likely to examine the clinical records of their beneficiaries that receive services at Tenet hospitals (and) you can very well expect the reaction to be quick and severe. Health Net and Blue Shield of California both say they are monitoring the situation.

Q. So what if it does happen at a hospital here?
A. There would probably be some disruption in patient care. The Blue Cross decision to drop Doctors Medical Center in Modesto, for example, "will certainly be a problem if your primary care physician uses that hospital," said Elizabeth Landsberg, supervising attorney for the Sacramento-based Health Rights Hotline. Blue Cross is advising members there to use another nearby hospital to avoid "substantial out-of-pocket charges." The same kinds of warnings could be expected here. In Orange County, though, there are a lot more hospitals to choose from and most physicians have privileges at more than one. So patients who couldn't be seen at one hospital might still be able to receive treatment from the same doctor at another, said Dr. Terence O'Heany, immediate past chief of staff at Fountain Valley Regional Hospital and former president of the Orange County Medical Association.

Q. What if my doctor practices only at one Tenet hospital?
A. If you have a doctor you're attached to, it would be a good idea to make sure he or she has admitting privileges at more than one hospital. O'Heany says it usually takes two to three months for hospitals to review physicians' applications and check their criminal and malpractice background with the National Practitioner Data Bank and state medical board. Emergency privileges can be granted only when a doctor has a unique skill or specialty that cannot otherwise be met at the hospital.

Q. Don't patients have protections under the law?
A. Yes, they do under the continuity-of-care clause in state law. That law protects patients when a health plan terminates a patient's provider or medical group. If you are seriously ill, or in the last stages of a pregnancy, your health plan allows you to continue seeing your doctor. But Landsberg said it's unclear if the law will protect patients when an HMO severs ties with a hospital.