While allegations of overbilling and fraud continue to swirl around Tenet Healthcare Corp., life goes on at the company’s Doctors Medical Center.

At least, that’s the official word from the one official who’s talking at the Modesto hospital.

“Babies are being born every day, and lives are being saved. And that is not changing,” said Catherine Larsen, director of public relations and marketing at the complex at Orangeburg and Florida avenues.

“There are a lot of things we would like to say, but the pricing part of it is not determined locally,” she said, referring to reports of unusually high charges at Doctors and other Tenet hospitals. “No one has disputed that the charges are high, but that doesn’t affect the quality of care.”

She said that admissions at Doctors have not been affected by the controversy, and that investigators have not visited the hospital.

Other than Larsen’s limited comments, the management staff at Doctors has remained quiet about the pending investigations into Tenet.

Tim Joslin, chief executive officer of DMC, declined to speak with The Bee on Thursday and Friday. The hospital is referring all media inquiries to Tenet’s corporate headquarters in Santa Barbara.

Tenet Healthcare Corp. acknowledged this week that it embarked on a strategy three years ago to raise prices and increase the payments it receives from insurers and Medicare, a strategy that Tenet CEO Jeffrey Barbakow said “was carried too far.”

Doctors Medical Center, as one of 42 Tenet hospitals in California, applied the same pricing policies that are now under scrutiny by the federal government and that played a role in the company’s spectacular revenue growth. Tenet also owns Doctors Hospital of Manteca.

DMC led all Tenet hospitals with total drug charges of $240.3 million in fiscal 1999-2000, according to the California Nurses Association, which has tracked the company’s price increases. The hospital also topped a list of Tenet facilities getting more from Medicare for routine medical procedures.

----------------------------------------------------------------------------------------------------

State Assembly hearing next month

The federal government is investigating the company’s billing practices and the state Assembly has set its own investigative hearings for January to focus on Tenet and other for-profit hospital chains.

Perhaps more stinging for the 397-bed DMC, which is Modesto’s largest hospital, are the barbs of patients who claim they were overbilled.

David G. Carlson of Modesto (no relation to the reporter) said he went to DMC with a suspected heart attack, but two days of tests determined the chest pains were caused by muscle spasms. His bill came to $90,000, including $10,500 for drugs.

“I don’t believe that the medications I normally consume would add up to that in 10 years, let alone 48 hours,” in wrote in an e-mail.

Gerry Senack, administrator for the national organization of the Food and Commercial Workers union, which provides insurance for workers at Gallo and other area wineries, faulted DMC for a sharp premium increase it passed to its members in April.

She said bills for heart surgeries at DMC were up to six times higher than what New York City hospitals charge for similar operations.

“The last bill I got from Tenet was over $600,000 for a heart surgery without complications,” Senack said, adding that the surgery was done at DMC. “I have an entire file of claims over $200,000 which were just obscene.”

Senack said her experience with Tenet shows how hospitals profit from raising their gross charges.

Enormous charges on hospital bills are rarely paid, because the rates are subject to negotiations with insurers. Most contracts specify that insurers pay hospitals a per diem but the agreements contain “stop-loss” provisions designed to protect hospitals when they treat the sickest patients.

Under its contract with Tenet, the Food and Commercial Workers union insurance group pays $1,200 per day for inpatients, but when gross charges hit $80,000, the contract pays 45 percent of gross charges, Senack said.

“They jack up the prices for operating room procedures, and other things, so it hits $80,000,” she said. “Then all bets are off.”

-------------------------------------------------------------------------------------------

Disparity in fair market comparison

After being deluged with big claims, the union last year hired a San Francisco firm that uses a computer program that compares “diagnostic related groups” for hospitals in California to come up with fair market values.

An analysis of 20 claims from Tenet showed an average of $288,000; the fair market value on those types of claims ranged from $48,000 to $61,000, Senack said. The insurance group settled claims by paying in the fair market range, but Tenet is appealing some claims, she said.

According to Senack, DMC’s prices skyrocketed two years ago and since then other hospitals in the area have followed suit.

“What I really believe is it is going to drive insurance funds like ours, the nonprofit funds, out of existence because we can’t afford it,” she said.

Tenet’s Barbakow, whose reported salary is $5.6 million this year, announced this week that the company would freeze but not roll back prices for the time being.

He also said Tenet would pursue contract with insurers that reduce the importance of stop-loss payments tied to gross charges. Tenet has also proposed discounted fates for uninsured patients.

The federal government is expected to change the formula next year for Medicare outlier cases. Similar to stop-loss provisions, Medicare outliers trigger higher payments to hospitals for the more expensive cases.

Tenet reported that from 1999 through 2002, 50 percent of its earnings-per-share growth came from Medicare outlier payments.

If the government changes the formula, Tenet spokesman Steven Campanini said, he could not say how it would affect DMC’s bottom line. “Tenet does not discuss the revenue of any of its individual hospitals,” he said.

The pricing issue has not carried over to a contract with Stanislaus County in which DMC cares for indigents and jail inmates, said David Jones, spokesman for the county’s Health Services Agency. Jones said the hospital is reimbursed for those cases based on strict rates set by Medi-Cal.

C.V. Allen, a retired physician who at one time was medical director at Memorial Medical Center in Modesto, said that pricing policies of for-profit hospitals are driving up health costs statewide.

“The evidence suggests that DMC is one of the state’s highest-priced facilities,” he said. “Their high costs have been recognized for a long time.”

Campanini called the impact of Tenet’s pricing policy on consumers “negligible” and said he doubted the issues would tarnish DMC’s reputation as a medical institution.

“People can continue going to the hospital and continue to get the same care they expected,” he said.

Bee Staff writer Ken Carlson can be reached at 578-2321 or kcarlson@modbee.com.

Reprinted by permission of The Modesto Bee.