Senator Eliot Shapleigh - El Paso, Texas

What about this town hall in Washington D.C.? How does health care work in El Paso, Texas? Let's take the case of Patient A. 

Half a century ago, El Paso boasted several not-for-profit hospitals.  In 1950, Hotel Dieu broke ground for a 270-bed hospital.  In 1952, Providence Memorial Hospital opened its doors with 272 beds.  In 1959, voters approved a 335-bed facility to be run by the hospital district (now known as University Medical Center).  All three were not-for-profit or religious-based care dedicated to patient outcomes.  In 1987, Hotel Dieu closed; and eight years later, the Board at Providence Memorial Hospital sold El Paso’s largest hospital to Tenet Healthcare Corporation (Tenet).  Today, Providence Memorial Hospital (still owned by Tenet) has 508 beds and some of the highest hospital costs in the U.S..

60 years later, nearly all of the inpatient hospital beds available in El Paso are run by for-profit corporations.  Now, profit lies at the heart of the private health care delivery system.  Overcharging and overutilization of services form the bases for some of the highest health care costs in the nation.  Sierra Medical Center and Providence Memorial Hospital—both owned by Tenet—are two of the leading profit centers in the entire U.S..  In fact, the three most expensive hospitals in Texas are Brownsville Medical Center, Sierra Medical Center in El Paso, and Providence Memorial Hospital in El Paso.  They were ranked as the #8, #37 and #46 most expensive hospitals in America.  All three are owned by Tenet.  

What does this mean for El Paso?  Let's look at an example.  An El Paso citizen, who was experiencing chest pains ("Patient A"), was admitted to Providence Memorial Hospital earlier this summer.  It turned out that Patient A was not having a heart attack, and therefore, surgery or any other major procedure was not necessary.  In fact, the only procedure performed was an angioplasty and Patient A was released within two days without any incident.  

A short time later, to his dismay, Patient A received a statement from Providence Memorial Hospital for $101,456.67.  The only thing more shocking than the amounts that Providence Memorial had charged for a relatively minor procedure was how much the hospital adjusted the charges for Patient A's insurance company, Blue Cross Blue Shield of Texas.  The insurance company paid $7,332.02—about 7 percent of what Patient A had initially been charged.

Unfortunately, Patient A's experience is not unique; it merely shows why medical costs are out of control in America.

Here's another example of Tenet's true motivation.  In June 2006, the Department of Justice reached a settlement with Tenet Healthcare Corporation ("Tenet") to pay the U.S. more than $900 million to resolve False Claims Act allegations related to Medicare fraud.  Of the $900 million settlement amount, the agreement requires Tenet to pay:

• more than $788 million to resolve claims arising from Tenet’s receipt of excessive “outlier” payments (payments that are intended to be limited to situations involving extraordinarily costly episodes of care) resulting from the hospitals inflating their charges substantially in excess of any increase in the costs associated with patient care and billing for services and supplies not provided to patients;

• more than $47 million to resolve claims that Tenet paid kickbacks to physicians to get Medicare patients referred to its facilities, and that Tenet billed Medicare for services that were ordered or referred by physicians with whom Tenet had an improper financial relationship; and,

• more than $46 million to resolve claims that Tenet engaged in “upcoding,” which refers to situations where diagnosis codes that Tenet is unable to support or that were otherwise improper were assigned to patient records in order to increase reimbursement to Tenet hospitals.

Until last month, this $900 million settlement was the largest False Claims Act in the country (Pfizer reached $1 billion settlement in September of 2009).  The chart below is a more complete listing of Tenet's civil and criminal cases. 

Source: The Top 100 False Claims Act Settlements, Corporate Crime Reporter, Dec. 30, 2003, available at: http://www.corporatecrimereporter.com/fraudrep.pdf and http://www.taf.org/top100fca.htm.

As U.S. Senator Chuck Grassley (R-Iowa), then Chairman of the U.S. Senate Finance Committee, aptly stated, "Tenet appears to be a corporation that is ethically and morally bankrupt."  Here is an excerpt from a letter addressed to Tenet dated September 5, 2003:

In the annals of corporate fraud, Tenet (formerly National Medical Enterprises (NME)) more than holds its own among the worst corporate wrongdoers. When Mr. Jeffrey Barbakow became president and chief executive of NME in 1993, NME was a scandal-plagued corporation accused of, among other allegations: maintaining a corporate policy at its psychiatric facilities of paying doctors for patient referrals; imprisoning patients for insurance payments; charging insurance companies for treatment and medication that were not provided, provided at grossly inflated prices or provided when unnecessary; and milking insurance until coverage was exhausted. After NME settled a wide-ranging federal investigation in 1994, for a then record $379 million healthcare fraud settlement, including $33 million in criminal fines, Mr. Barbakow, who had been an outside director for NME since 1990, stated that NME’s problems were worse than they seemed when he became CEO (prior to his stint as an outside director, Mr. Barbakow helped finance NME’s growth for more than a decade as an investment banker for Merrill Lynch).

After taking the reins of the corporation, Mr. Barbakow settled myriad allegations against NME, by agreeing to pay more than $600 million in legal settlements, and agreeing to plead guilty to several felony offenses, including charges of kickbacks, bribes, unnecessary medical treatments and false billings, at its psychiatric hospitals in 30 states. In addition, NME agreed to divest itself of its psychiatric facilities and agreed to a mandatory corporate integrity agreement (CIA) that required NME to implement a program designed to insure integrity in its relations with the government and the quality of care it provided. Finally, in 1995, NME changed its name to Tenet Healthcare Corporation after merging with American Medical Holdings, Inc.

Unfortunately, a change of names did not change the culture of fraud at the corporation. If anything, Tenet’s history of defrauding government healthcare programs reached new heights under Mr. Barbakow. The NME management team that agreed to the record $379 million settlement in 1994, including Mr. Barbakow, Ms. Christi R. Sulzbach, and four out of ten members of the Board, remained largely intact after the name change to Tenet. Ms. Sulzbach, who signed the settlement and CIA with the Department of Justice (DOJ), was promoted and became Tenet’s chief corporate officer, general counsel and chief compliance officer. According to the Department of Health and Human Services (HHS), Office of Inspector General (OIG), Tenet did not stay on the straight and  narrow and has been the subject of at least 53 federal investigations dating back to the 1994 CIA, including among others, allegations of cost report fraud, upcoding, overbilling, duplicate billing, kickbacks, providing medically unnecessary services, misrepresenting services, falsifying medical records, billing for services not rendered, providing poor quality of care, and for patient abuse. Tenet has paid over $500 million to settle many of these investigations...

The $54 million settlement, as well as Tenet’s failure to acknowledge any liability or wrongdoing, is further evidence, in my opinion, that Tenet views healthcare fraud settlements as the cost of doing business with the federal government, while profiting at the expense of innocent victims and America’s taxpayers. It is long past due that Tenet, and its officers, directors and board members, be held accountable for the corporate culture and governance practices that resulted in healthcare settlements totaling over a billion dollars in the past decade.

And as many of you might remember, Tenet spent hundreds of thousands of dollars trying to kill our new Children's Hospital, another "public option."  Upon review of reported political contributions and expenditures, Tenet spent at least $285,194.21 to oppose the Children’s Hospital Bond in 2007—this figure does not include the thousands of dollars Tenet spent to advertise their children's wing as "The Children's Hospital at Providence." 

Total Political Expenditures in Opposition of Children's Hospital Bond

*Political Contribution by Tenet to Texans for Fiscal Responsibility as reported by TFR in their campaign finance report.

Let's look at some other numbers.  As the chart below shows, the average cost of cardiac care at Providence Memorial Hospital is more than $15,000 per day, and at Sierra Medical Center, it's more than $18,000 per day.  At R.E. Thomason General Hospital (now known as University Medical Center of El Paso)—the "public option"—it's less than $4,000 per day.  

Click here to view larger image.

In other words, these Tenet-owned hospitals charge about four times what the public hospital charges.  To protect these profit margins, Tenet spent hundreds of thousands of dollars to try to kill the Children's Hospital bond.  And this is why a licensed not-for-profit Children's Hospital will deliver so much more value for your dollar.

Here in El Paso, in so many ways the frontier of the future, our citizens experience daily the hundred reasons why we need health reform now.  One in three in El Paso has no health insurance.  We have fewer doctors per capita here than in any large city in America.  High health costs are redistributed among those who can least afford it.

From the mother in Montana Vista who drives forty miles round trip to have her son’s broken arm set to the single mom with two children who has health insurance, but it’s not enough—so she is now in Chapter 13, paying what she can over time.  From the state representative, who gets an appendectomy in Juarez because he bought a "bare bones" policy to the middle aged professional who changes jobs but must leave his health coverage behind.  

El Paso needs reform now.