Healthcare group agrees $500m settlement for unnecessary surgery

Healthcare group agrees $500m settlement for unnecessary surgery

New York

Jeanne Lenzer

The second largest health provider in the United States, Tenet Healthcare, has agreed to pay nearly $500m (£270m; €390m) to settle claims that doctors did unnecessary surgery at the Redding Hospital, in Redding, California.

The hospital was raided by 40 agents from the Federal Bureau of Investigation in 2002 after it received reports that doctors were performing numerous unnecessary cardiac operations (BMJ 2002;325:1130).

The settlement was signed on 14 June and is the largest ever for unnecessary procedures and ends all civil and criminal actions arising out of the allegations.

In a separate settlement on 29 June, Tenet agreed to sell 11 hospitals and pay $900m to resolve charges that they overcharged Medicare $1.5bn.

One of the hospitals that Tenet undertook to sell is the well known Cleveland Clinic Hospital in Weston, Florida. Tenet, a for profit hospital company, bought up a number hospitals and non-profit healthcare organisations to become the second largest healthcare chain in the United States. Until recently, it owned and operated 73 hospitals, providing 18 445 hospital beds.

Tenet has denied wrongdoing and says certain "mistakes" in billing have now been corrected. Harry Anderson, a spokesman for Tenet, wrote in an email to the BMJ, "Since the Redding matter and other issues surfaced in October 2002, Tenet has significantly changed its management, business strategy, and corporate culture.

"We are a stronger and better company today. In fact, we are recognised as having the best corporate governance among all the major healthcare companies, and recent statistics from the Centers for Medicare and Medicaid Services show that clinical quality at Tenet hospitals, as measured on more than a dozen standard metrics, is the highest among all the investor owned hospital companies."

The 14 June "global settlement" resolves multiple claims, including civil suits by 769 patients and their survivors and claims by three whistleblowers, including those of a doctor at Redding and a patient who contacted the FBI.

Tenet will pay $395m to settle the patients’ civil suits, for an average payout of more than $500 000 a patient. The settlement included an earlier $54m payment by Tenet to the government to settle state and federal civil investigations in the Redding case. Tenet sold the Redding Hospital in 2004 as part of the settlement agreement in order to avoid exclusion from Medicare and other federal healthcare programmes.

Before the FBI investigation, researchers at Dartmouth Medical School noticed an unusually high number of patients at Redding were undergoing cardiac bypass surgery. Elliott Fisher, professor of medicine at Dartmouth and coauthor of a study that examined geographic variations in Medicare spending said, "Redding stood out as performing the highest rate of bypass surgeries, per capita, in the country." The Dartmouth data show that in the mid-1990s, Medicare patients at Redding were twice as likely to have bypass surgery as patients in other California cities.

By 2002, the rate was nearly triple. Professor Fisher said that the events at Redding are "emblematic of deeper problems across the US. Our current payment system rewards physicians for doing more procedures and not for assisting patients in making good healthcare decisions or in obtaining positive outcomes."

"Our payment system is toxic to good patient care," said Professor Fisher.