Affiliated with AFSCME and AFL-CIO

Columbia/HCA
by Michael Merrill

"Communities have seen all across the country what they do, they slash staff, cut services, consolidate and down size," said California Nurse's Association (CNA) Labor Representative Beth Shafran. Shafran was referring to health care giant, Nashville based Columbia/HCA, the largest of 12 health care corporations on the annual Fortune 500 listing.

Columbia has been gobbling up properties at a stunning rate. It now controls 350 hospitals, 155 outpatient-surgery centers and 110 home health care operations in 3 8 states, Great Britain, Spain and Switzerland. In nearly every community, that takeover has resulted in controversy. According to Shafran, Watsonville Community Hospital (WCH), the last privately-owned and operated hospital in the Monterey Bay area, appears to be on the menu.

WCH President and CEO John Friel disputes Shafran's claim and says that although he has been in negotiations with several for-profit health care companies, Columbia being one of them, the hospital has made no decisions as to which, if any, companies it will take on as a partner.

According to several union members, Friel is not being entirely honest when he characterizes Columbia as just one of many options. They say Columbia has made its intention to acquire WCH quite clear, making presentations to both hospital administration and union members on several occasions.

In a March 5 interview with the Nashville Banner, Linda Miller, president of the Washington, DC. based Volunteer Trustees of Not-for-Profit Hospitals, said Columbia/HCA and other "for-profits" are stripping communities of valuable assets under a veil of secrecy. She was quoted by the Banner as saying, "We're looking at the largest redeployment of charitable assets in history. People are just now starting to realize the scope of this thing." The "thing" she was referring to was the accelerated rate of takeovers of not-for-profit hospitals by for-profit hospital companies. "Time and time again, this is what we see when Columbia is in the picture," Miller told the Banner. When these acquisitions occur, they are shielded from public scrutiny. Public companies are required by the Securities and Exchange Commission to disclose every detail of the transaction. Community hospitals are not subject to the same requirements.

"The community neither had access to, nor were they privy to, the terms of the deal," Miller told the Banner. She added that as a result of this secrecy, it is nearly impossible to determine if an administrator has a financial stake in promoting a merger or takeover. Miller told the Banner, "But because they're community hospitals, it's as if the public has no right to know."

Columbia's meteoric rise is no mystery. The company derives its power through money, and by applying its systematic program of assembly line-like health care, it generates huge amounts of cash. Susan Whitten, Vice President of Sales, Marketing and Public Relations for Columbia’s Pacific Division, said Columbia’s revenues for 1996 were $19.1 billion. With cash comes power, and Columbia has not been shy in applying this power.

INFACT is a national grassroots organization founded in 1977 whose purpose is to stop abuses by transnational corporations and increase their accountability. It is best known for its successful Nestle and GE boycotts and its Academy Award winning documentary, Deadly Deception.

In 1996, INFACT launched it's "Hall of Shame" campaign in an attempt to shine a spotlight on corporate abuses of power. To date, five corporations have been formally inducted in public events: Philip Morris, RJR Nabisco, Dow Chemical, WMX Technologies (Waste Management) and Columbia/HCA Health care, which the group says meets its stringent criteria for induction into INFACT's infamous Hall of Shame for corporations that use political influence to the detriment of public health.

Joined by Service Employees International Union, INFACT inducted the hospital chain in a spirited noon ceremony outside Columbia Sunrise Hospital in Las Vegas. Hospital workers and community supporters chanted, "SHAME, SHAME, SHAME!" as Columbia/FICA's "achievements" were recounted. INFACT also released a "Corporate Imbalance Sheet" detailing influence-peddling activities and the impact of Columbia's practices on public health.

Registered Nurse Gina Hendershot was quoted by INFACT as saying, "During my time in the Columbia Sunrise ER, they've increased the number of beds by one-third without increasing staff. There are rooms full of patients with no nurse assigned ... I care about my patients and want to do everything to convince Columbia management that it should start caring about them too."

According to INFACT, Columbia has been buying political influence through lobbyists and direct political campaign contributions. The corporation has powerful friends, and relatives, in high places, including US Senator William Frist (TN), brother to Columbia/HCA's vice-chair Thomas Frist, whose net worth has been listed at $1.1 billion. Senator Frist owned $13.9 million in Columbia stock as of 1995 and sits on several key committees which oversee legislation that impacts the health-care conglomerate.

Florida Senator Ginny Brown-Waite received $30,000 as a consultant to Columbia/HCA while serving on the Senate Health Care Committee. During this same time period Columbia hired 24 lobbyists who successfully repealed a 1992 Florida state law requiring the corporation to disclose its physician-investors. Columbia's Good Government Fund contributed $216,000 of PAC money in Florida in 1994, making it Florida's largest PAC, in spite of being fined $70,000 for two separate patient dumping" violations in Florida. It now owns 30 percent of all hospitals in that state.

With a price tag of $2 billion, the 1996 US elections were the most expensive ever. Big business, after investing heavily in campaigns, lined up for their rewards soon after the ballots were counted. Columbia/HCA's phalanx of 97 registered lobbyists in 23 states secured certificates of need and legislative approval of hospital deals. Columbia is Medicare's single largest biller as well, deriving 36% of its profits from the federal program. According to INFACT, there is evidence that Columbia has abused this relationship on more than one occasion.

INFACT reports that investigators determined that Medicare had been paying out nearly 10% more at a Texas Columbia/HCA hospital than any other hospital in the state. Truckloads of documents were seized from the hospital chain in a federal investigation to determine whether the corporation has been over billing Medicare, and whether Columbia/HCA physician investors are illegally referring patients to Columbia/HCA facilities where they have a financial stake. The chain has been fined twice for "patient dumping," discharging unprofitable patients without proper medical attention. Several studies have documented that for-profits provide less care to poor people and charge more for the same services than non-profit hospitals.

On July 30, 1997, the following article was released by the Associated Press. -- Columbia/HCA Healthcare Corporation learned today that the U.S. District Court for the Middle District of Florida, in Fort Myers, issued an indictment against three Columbia employees. The indictment relates to Medicare and CHAMPUS reimbursement issues since 1986 at Columbia Fawcett Memorial Hospital, a Port Charlotte, Fla. hospital acquired by Columbia in 1992.

The specific allegations relate to alleged false characterization of interest payments on certain debt resulting in overpayments to the hospital by Medicare and CHAMPUS.

"I can assure you that we take these allegations very seriously and will cooperate fully with the government, "said Thomas F. Frist, Jr., M.D., Chairman and Chief Executive Officer of Columbia.

Perhaps one of the most serious charges against Columbia is its penchant for acquiring several properties in one geographic area and then closing one or more of them, creating de-facto, localized monopolies, sometimes leaving isolated rural communities without health care.

In Gilmer, Texas, local residents believe people died who may have survived if Columbia/HCA hadn’t closed the town’s only hospital.

In El Paso, Texas and Palm Beach, Florida, for-profits' hospital closures have left only one emergency room in each city, "endangering patients, lives," said the medical director at one Columbia/HCA hospital. "We will continue to support the efforts' of our thousands of employees to provide high quality patient care."

Unfortunately, patients are not the only casualties of Columbia’s tactics. Investors who do not have an inside track have been duped as well. On April 26, 1997 the Bloomberg News service reported that "executives and directors of Columbia/HCA sold 252,572 shares that were near 52week highs in the month before the federal government raided company facilities in Texas and the stock tumbled."

The Arizona Republic, in a report by reporter Aimee Sullivan, said that Richard Scott, Columbia Chairman/CEO, exercised his option to buy 90,000 shares at $13 each and immediately sold them for $42.48 each, netting $2.6 million. Scott made his profitable transaction February 25. Two days later, Donald Steen, president of Columbia's international operations, bought 55,922 shares at $16.92 and sold them the very next day for $42 pocketing $1.09 million in the process.

Other top executives have demonstrated remarkable timing as well. During February and March, Daniel Moem, in charge Of Columbia’s network division; Jamie Hopping and Jay Grinney, Eastern and Western heads respectively, bought and sold 56,500 shares for a combined profit of over $1.5 million -- four days before Columbia officials revealed that four of its El Paso hospitals, along with 20 of its affiliated doctors had been served with search warrants.

May 21, two months after federal raids, on Columbia offices began, Wall Street Journal reporter Rick Brooks wrote that "At first glance, Columbia/HCA Healthcare appears to be on a gurney... One of Columbia's big problems was the image the company had acquired -- a poster child for the discomforting changes in health care."

On July 23, Columbia directors began publicly considering whether or not to ask CEO Rick Scott to resign. On July 25, Scott and David Vandewater, Columbia’s president and chief operating officer, bowed out.

According to the California Nurses' Association newsletter, Columbia Watch, Columbia/HCA is moving into California in a big way. In a little over two years the company has acquired 17 hospitals and 13 outpatient centers in the state and currently has deals pending with seven more acute care facilities. Whitten said in a telephone interview, that is simply not the case. "Currently we are in negotiations with only three hospitals in California", Whitten said. "Watsonville Community Hospital, Fallbrook Hospital in San Diego County and U.C. Irvine Medical Center in Irvine."

"They (Columbia/HCA) are rapacious," Columbia Watch editor Carl Bloice said, "Unfortunately it is only when Columbia moves into a community, then they learn what Columbia has been doing in other parts of the country."

"Hardly a week goes by without a story about Columbia buying a hospital and then closing it down six months later," Bloice continued. "Columbia is the logical conclusion of for-profit health care. Once they have dominant control of an area, services are cut back. Offering less for more is the basis of profit. The people who are adversely affected are the patients, the hospital staff and ultimately the community." When asked for a rebuttal, Whitten had only one quibble. I would agree with most of that statement," she, said, "except the part about closing down hospitals. Since 1986, 87 hospitals have been closed in the United States. We've closed, seven of them. The exaggeration makes good press but it is not reality."

Bloice said another example of Columbia’s controversial methods of operation occurred at St. Mary's Hospital in Enid, Oklahoma. Rather than sell the not-for-profit hospital outright, management leased the hospital to the Hospital Corporation of America(HCA), which later merged with Columbia.

Almost from the beginning the transition was not a smooth one. Kathy Berry of St. Mary's Public Relations Department said HCA is staffed to the bare bones. "They cut every department to the quick. They cut nursing so much the sisters felt they could not fulfill their mission."

"They buy clinics, buy doctors. They go for power and they own you," Berry said. "They own your town and your newspaper."

"Eventually, the Sisters of Mercy hired an attorney and through lengthy battles won their hospital back," Bloice said. Bloice said Cape Fear Memorial Hospital in Cape Fear, North Carolina was not that lucky. The takeover was scheduled for May 1, 1995 but was held up when the day before, the state attorney general's office asked Columbia to sign a pledge that it would maintain care for poor patients and emergency medical services at the level historically provided by the hospital. Columbia refused.

"The sale, however, had the strong backing of Tom Sinclair, an 82-year-old physician who helped found Cape Fear Memorial and the next day a consensus agreement was worked out that ended the independent existence of the 39- year-old facility," Bloice said. Less than two months later, the citizens of Cape Fear learned the same lesson that other communities have learned about Columbia’s management style. On Monday, June 24, 1996, 39 employees were informed it was their last day.

Whitten would not comment on that specific incident, but she said, "When we come into a facility, the same people who were delivering health care yesterday are there today. Most of our cuts are administrative -- purchasing, materials management and billing -- because we are able to obtain an economy of scale that single hospitals and small systems can't do on their own."

According to the March 13, 1996 edition of the New England Journal of Medicine, Whitten's assertion is not supported by facts. In a study conducted by Harvard Medical School and reported in the Journal, patient costs are higher in for-profit hospitals. The report concluded that the market approach to medicine is "breeding inefficiency."

In many ways, the problems of modem health care mirror the same transitional difficulties other industries have experienced in the last decade. Market principles dictate standardization and quantification. Costs, in order to be controlled, must be identified, categorized and limited. This methodology may work efficiently with commodities, but more and more physicians and nurses are realizing that it is fraught with pitfalls when applied to human beings.

Medicine is as much art as science, and art by committee cannot, by its very definition, approach the quality that can be attained when individual genius is combined with inspiration.

Human biology has as many variations as there are humans. Whenever systems developed to process commodities with a finite number of variations are applied to a commodity which has infinite variations, a percentage of that product will be lost in the form of spoilage during processing. It is considered an inevitable and fixed cost, built into the system. This irreconcilable collision of philosophies lies at the heart of the for-profit health care controversy.