Columbia Hca Medicare Scandal

Topics: Hospital Corporation of America, Richard L. Scott, Kohlberg Kravis Roberts Pages: 4 (1162 words) Published: September 28, 2006
Case Study: Columbia / HCA and the Medicare Fraud Scandal

Central Facts of the Case

„XIn 1997, Columbia/HCA Corporation was the largest health care company in the world „XIn 1996, Columbia Hospital Corporation was named the ¡§Most Admired Company¡¨ by Fortune magazine „«Clearly they were a well-respected, well-trusted company not too long before they were raided, and during a time that they were under investigation (not known to the public at the time) for fraudulent activity „XColumbia was buying up as many hospitals and other health-related business as it could „XBecame a public company in 1990

„XPhysicians were allowed to own a stake in Columbia/HCA hospitals

Major Overriding Issue / Related Questions

The overriding issue is that Columbia/HCA acted illegally and unethically in their dealings with the Medicare program. This raises the following questions:

„XShould doctors be allowed to be shareholders in hospitals? Physicians are not allowed to refer patients to institutions, such as home-health providers, that they own a stake in ¡V should this law be extended to hospitals as well? „XShould hospitals / provider institutions even be allowed to be publicly-held, publicly-traded institutions? „XIs the government at all at fault for fraud at institutions that administer their Medicare programs, due to cut backs that may have led to weak enforcement of the program? „XShould a company be expected to abide by rules / regulations set forth by a program such as Medicare, without any outside enforcement? „XWas the compensation system employed by Columbia/HCA the best-suited for their organization? „XWas Board oversight sufficient ¡V could they have gotten involved sooner?

Evaluation of Company Actions

„XWent public ¡V allowed physicians to be shareholders
„«Physicians who were stakeholders have reason to watch their spending and comply with directives put in place by hospital management „«Physicians should always have the...
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