When Tenet last month announced another federal
investigation of its business practices, it hardly seemed like news.
After all, the latest probe centers on the
hospital operator's financial arrangements with physicians at a
single, relatively small facility in Northern
California. And Tenet had long warned that
investigators seemed interested in its relationships
with physicians companywide.
But the stakes could prove higher this time
around. Until now, federal authorities have primarily
focused on Tenet's "relocation agreements" with newly
recruited physicians. Now, however, they are starting
to question medical directorships -- often filled by
powerful, established doctors -- at the company's San
Ramon Regional Medical Center as well.
Some health care analysts and attorneys view the
physician-related probes as the biggest threat to
the company. They believe the mounting scrutiny from
regulators has already hurt patient referrals,
and they fully expect the pain to intensify.
Mark Kleiman, a Los Angeles attorney who focuses
on health care fraud, says medical directors can be big
patient admitters who generate substantial revenue.
But much of that cash could be at risk, he says, if
the government proves that the directors have been
improperly rewarded for their patient referrals.
Kleiman says that prosecutors can force hospitals
to return any Medicare funds they have collected as a
result of referrals by physicians who pocketed illegal kickbacks.
"This should be alarming from an investor's
standpoint," Kleiman says. "I would be very nervous."
Tenet itself seems less concerned. Indeed, the
company portrays the latest investigation at San Ramon
as little different from other reviews previously
disclosed to investors. And the company's current
legal counsel -- once a high-level attorney for the
government -- has pledged to resolve the probes in the
end.
Tenet refused to answer questions about its
medical directors for this story. The company's stock,
once a $50 highflier, slipped a dime Tuesday to
$11.09.
Side Effects
Even before news of the latest probe, the San Ramon
facility was no stranger to trouble.
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Melissa Davis
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