healthy4u: Aultman Hospital

Guest Post: the Slow Grind of Justice

<br /> <br /><div class="MsoNormal"> <i><span style="background-color: white; color: blue; font-size: xx-small;">Health  Care Renewal presents a guest blog by Steve Lucas, a retired  businessman who formerly worked in real estate and construction who has a  long standing interest in business ethics, and has long observed the  health care scene.</span></i></div><div class="MsoNormal"><br /></div><div class="MsoNormal">The March 14, 2013 Akron Beacon Journal print edition highlights what I am sure Mercy  Medical Center hopes is the end of a long legal battle with Aultman Health Foundation. </div><div class="MsoNormal"><br /></div><div class="MsoNormal">Cheryl Powell <a href="http://www.ohio.com/business/ohio-supreme-court-throws-out-aultman-s-appeal-in-battle-with-rival-mercy-hospital-1.380889">writes</a> in <i style="mso-bidi-font-style: normal;">"High court throws out appeal by Aultman"</i> highlights the Ohio Supreme Courts dismissal of Aultman’s suit brought in regards to a 2010 court ruling that Aultman pay Mercy $6.1 million for unfair business practices.  </div><div class="MsoNormal">A review of that legal action can be found on <a href="http://hcrenewal.blogspot.com/2010/06/guest-post-hospital-passing-that-low.html">this Health Care Renewal post</a>.</div><div class="MsoNormal"><br /></div><br /><blockquote class="tr_bq"><div class="MsoNormal">The legal battle centers on 'secret ´bonuses paid to select brokers for switching employers from other insurance plans to Aultman’s insurance company, AultCare.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">Aultman Hospital is AultCare’s only in-network hospital in Canton.'</div></blockquote><br /><div class="MsoNormal"><br /></div><div class="MsoNormal">It is important to remember that AultCare is an aggressive for-profit insurance company.</div><div class="MsoNormal"><br /></div><br /><blockquote class="tr_bq"><div class="MsoNormal">At the end of the two-month trial in Stark County Common Please Court, jurors decided Aultman should pay Mercy more than $6.1 million in damages for engaging n a pattern of corrupt activity by influencing brokers with money.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">'Evidence during the trial showed that for a period of time, brokers weren’t allowed to disclose the payments to anyone, even the clients they represented.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">Aultman officials have said the confidentiality requirement was dropped in 2004, well before Mercy filed its lawsuit.</div></blockquote><br /><div class="MsoNormal"><br /></div><div class="MsoNormal">We see an all too familiar behavior pattern: someone sensing that he or she is about to be caught drops an activity and then feigns innocence for our past transgressions. How often have we seen a drug company sign a consent agreement only then to return to court to sigh another consent agreement? How often are we told that an activity was committed by a low level sales person and that person is no longer with the company?</div><div class="MsoNormal"><br /></div><br /><blockquote class="tr_bq"><div class="MsoNormal">Aultman has continued to criticize the case Mercy filed, calling it a waste of resource for the non-profit health-care organizations.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">'We have always felt that this case was not positive for our community, that resources were shifted in a way that was not beneficial to the community' [the attorney representing Aultman, Allen] Schulman said. 'I don’t think that it serves the community well.'</div><div class="MsoNormal"><br /></div><div class="MsoNormal">[ Mercy President and Chief Executive Thomas] Cecconi said Mercy felt an obligation to fight Aultman’s business practices for the community’s sake.</div></blockquote><br /><div class="MsoNormal"><br /></div><div class="MsoNormal"><b>Conclusion</b></div><div class="MsoNormal"><br /></div><div class="MsoNormal">Once again we find the use of the legal system perverted by one party in an effort to gain a business advantage over another entity.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">Aultman has used its non-profit status to shield the activities of a for-profit insurance subsidiary.  Perhaps someone thought that no one would sue a large non-profit hospital for the actions of the subsidiary.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">Aultman used the tired old refrain that “we don’t do that anymore” as a defense for past business practices that garnered questionable profits. This after the fact admission does not absolve them of responsibility for those actions.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">When all else fails Aultman uses the appeal that it reflects badly on the community. It really does not matter that they were the ones who engaged in this activity. Additionally they make the claim this will result in a decline in resources available when they profited from the original activity.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">These are old concepts to HCR readers. The use of the legal system, from law suits being filed against those who would blow the whistle, to grinding out appeals to bleed a person or organization dry, all in an effort to protect a questionable or even illegal activity. In this case there is still the issue of Mercy’s legal fees involved in Aultman’s appeal.</div><div class="MsoNormal"><br /></div><div class="MsoNormal">Smaller markets are seeing a consolidation of hospitals and medical practices. The opportunity for one party to take advantage of this is growing as patients and doctors are presented with limited opportunities to seek appropriate medical care. When the hospital owns the insurance company, and your care will be dictated by the policy available through only one company, the opportunity for abuse has to be acknowledged. </div><div class="MsoNormal"><br /></div><div class="MsoNormal">Mercy has begun to grow again by offering the community a less corporate medical experience. Interestingly, Mercy and Aultman have collaborated on securing scarce oncology drugs. It appears some doctors still feel it is about caring for the patient, and less about loyalty to a corporate logo.</div><div class="MsoNormal"><br /></div><div class="MsoNormal"></div><div class="MsoNormal">Steve Lucas</div><div class="MsoNormal"><br /></div>

Guest Post: the Slow Grind of Justice

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18 Apr 2013

Guest Post: A Hospital Passing "That Low Cost Onto the Community" - By Secret Payments to Insurance Brokers to Sign Up Policy Holders?

<em><span style="background-color: white; color: blue; font-size: x-small;">Health Care Renewal presents a guest blog by Steve Lucas, a retired businessman who formerly worked in real estate and construction who has a long standing interest in business ethics, and has long observed the health care scene.</span></em><br /><br />We have a verdict in the largest legal suit, $110M, ever brought before the court in Stark County, Ohio. The issue at hand has been the payment of fees by a nonprofit hospital (Aultman) through its for-profit insurance subsidiary (AultCare) to switch clients to this hospital's insurance plan. Aultman is the only in program hospital in our area.<br /><br />Confidentiality agreements have kept this practice in place for a total of 12 years, with knowledge of the arrangement only recently becoming public.<br /><br />First the back story: What is today Mercy Medical Center is owned by The Sisters of Charity. This hospital had popular community and business support. Wishing to get away from the business of running a hospital and focus on philanthropy, half of the hospital was sold to Columbia Health in 1996.<br /><br />Columbia traded on the name and community support and followed a common course of action of reducing staff and maintenance in an effort to maximize profit. Realizing their mistake, the Sisters entered into another partnership with a nonprofit in 1999 and have recently been able to regain total control of the facility.<br /><br />During this time Aultman Hospital, owned by The Aultman Health Foundation, was able to leverage this discontent into a massive expansion of both its physical plant and position in the community.<br /><br />Unknown to the community at large this growth was being driven by questionable business practices:<br /><blockquote>The case revolves around allegations by Mercy that Aultman 'bribed' brokers with extra payments – in some cases, as large as $1 million – to persuade employer groups to switch to Aultman’s insurance plans, AultCare and McKinley Life Insurance.<br /><br />These payments weren’t disclosed to the brokers’ clients or on federal tax forms that non-profits must fill out to maintain their tax-exempt status, lawyers told jurors in court.(1)</blockquote><br />The point of contention was the payment of to a select group of brokers of what amounted to a kick-back, without notifying their customers of the additional payments.<br /><br />We then find:<br /><blockquote>The leader of Aultman Health Foundation on Tuesday defended the nonprofit’s practice of using tax-exempt money to fund confidential payments to select insurance brokers. (2)</blockquote><br />I guess it is ok as long as nobody knows, and the 65,000 people covered under this scheme should be happy.<br /><br />We then find that Mercy’s CEO:<br /><blockquote>... said he first learned of Aultman’s program that gave extra payments to select brokers who switched clients from other insurance companies in a 2004 Akron Beacon Journal article. (3)</blockquote><br />The Aultman CEO responded:<br /><br /><blockquote>Roth said those payments were part of a business strategy to save area businesses money by sharing the results of Aultman Hospital’s cost cutting measures since the 1980’s.<br /><br />'We want to pass to pass that low cost onto the community,' Roth said. (4)</blockquote><br />It is interesting to note that Aultman changed the structure of its agreements with doctors to allow for them, the doctors, to receive co-pays directly. It was also revealed Aultman was paying at least one large medical group direct payments for exclusive referrals. <br /><br />So now we come to the jury’s decision: $6.1M for Mercy, both sides claim victory. Mercy feels it will change the way Aultman does business.<br /><br /><blockquote>Aultman plans to continue business as usual and won’t make any changes as a result of the verdict, President and Chief Executive Edward Roth said. (5)</blockquote><br />In our small market, the dollars are so large in health care that a multi-million dollar settlement will not change behavior. The use of tax-exempt funds to pay kickbacks and bribes is ignored and there is no public out cry, only Aultman filing another suit to have the verdict set aside.<br /><br />Altman claimed it needed the payments to be competitive with Columbia. This, win at any cost business attitude, has taken over great parts of medicine reducing what was once a proud profession into a simple process of number crunching.<br /><br />Aultman focused time and time again during the trial on its size, the largest employer in Stark County, and its position in the community. This is no excuse for corrupt behavior.<br /><br />Has health care become so corrupt, the dollars so large, that a little corruption is ok, as long as it does not hurt the bottom line?<br /><br />Follow on radio reports made it very clear Aultman would suffer no financial hardship due to the verdict and there would be no change in services. Business would continue as usual. <br /><br /><span style="font-size: x-small;">References</span><br /><span style="font-size: x-small;"><br /></span><br /><span style="font-size: x-small;">(All from The Akron Beacon Journal)</span><br /><span style="font-size: x-small;">1. April 3, 2010. </span><a href="http://www.ohio.com/news/90142917.html"><span style="font-size: x-small;">Canton hospital exchange charges in court</span></a><span style="font-size: x-small;">. </span><br /><span style="font-size: x-small;">2. April 14, 2010. </span><a href="http://www.ohio.com/lifestyle/health/90813054.html"><span style="font-size: x-small;">Aultman executive defends payments</span></a><span style="font-size: x-small;">.</span><br /><span style="font-size: x-small;">3. April 23, 2010. </span><a href="http://www.ohio.com/news/91888484.html"><span style="font-size: x-small;">Mercy CEO testifies in court</span></a><span style="font-size: x-small;">. </span><br /><span style="font-size: x-small;">4. May 5, 2010/ </span><a href="http://www.ohio.com/lifestyle/health/92824599.html"><span style="font-size: x-small;">Aultman defends “unique” incentives</span></a><span style="font-size: x-small;">. </span><br /><span style="font-size: x-small;">5. June 9, 2010. </span><a href="http://www.ohio.com/news/break_news/95914624.html"><span style="font-size: x-small;">Jury awards Mercy $6.1 million</span></a><span style="font-size: x-small;">. </span>

Guest Post: A Hospital Passing "That Low Cost Onto the Community" - By Secret Payments to Insurance Brokers to Sign Up Policy Holders?

Health Care Renewal presents a guest blog by Steve Lucas, a retired businessman who formerly worked in real estate and construction who has a long standing interest in business ethics, and has long ob…

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10 Jun 2010