Tenet Feels the Heat From the Feds

Tenet (THC Quote) may soon be fighting the equivalent of a nasty autoimmune disease.

Like the crippling ailments that turn the body's protective immune system against itself, Tenet's top managers could soon be feeling pressure to assail their corporate host. Already, federal agents have indicted one Tenet hospital CEO and issued subpoenas that could trigger fresh criminal charges at seven other facilities. And experts doubt the probes will end there.

"The Department of Justice seems to be moving ahead relatively quickly with what is known as a 'twisting in the wind' strategy, where one or two charges are filed but many more are being considered," said Peter Young, a health care consultant with Florida-based HealthCare Strategic Issues. "And they use the threat of conspiracy while persons or companies twist in the wind."

Indeed, last week's indictment of Tenet's Alvarado Hospital Medical Center -- which followed an earlier indictment of Alvarado CEO Barry Weinbaum -- specifically accuses the hospital of conspiring to defraud the federal Medicare program by paying illegal kickbacks to physicians in exchange for patient referrals. The new probes at seven other Southern California hospitals also question perks for Tenet physicians.

Tenet, which has denied any wrongdoing, failed to grant an interview for this story. But the company's own actions speak loudly about the potential magnitude of the DoJ probe. In a speech this week at Tenet's annual meeting, CEO Trevor Fetter revealed that the company had secured industry hotshot D. McCarty Thornton -- the former inspector general chief counsel who led the big attack on HCA (HCA Quote) -- as a consultant. And Thornton himself has publicly warned of serious repercussions for physician kickbacks.

"Thornton identified antikickback violations as the hottest area of risk for health care providers," the American Health Lawyers Association reported earlier this month. And Thornton emphasized that "greed is not good."