Tenet Takes Another Shot

"The whole structure of the industry focuses on maximizing profits and revenues regardless of the impact" on patient care, said CNA spokesman Chuck Idelson. "I doubt that this problem is unique to Tenet. ... But Tenet's record certainly speaks for itself."

Alvarado alone is accused of bribing San Diego physicians -- who referred patients to the hospital -- with more than $10 million in illegal kickbacks between 1992 and 2002. Tenet itself is being questioned about physician contracts, dating back to 1995, for all of the southern California hospitals under scrutiny.

Tenet has already paid a record-breaking $54 million fine to settle allegations that it profited from unnecessary surgeries at its hospital in Redding. But the kickback probe could prove even more expensive. According to Modern Healthcare, physician kickbacks are considered criminal offenses that call for hefty fines -- $50,000 per violation and triple the kickbacks paid -- as well as exclusion from vital government programs like Medicare and Medicaid.

For its part, Tenet has denied any wrongdoing. The company once again defended its practices when announcing Nazaryan's possible indictment on Wednesday.

"Tenet has previously said that it believes its corporate policy on physician relocation agreements, which has been in place since 1996, is entirely appropriate under the law," the company reminded on Wednesday. "Fewer than 2.5% [of Tenet physicians] have relocations agreements now in place."

Still, those contracts -- an estimated 1,000 -- are vulnerable to tough government scrutiny. Along with various government agencies, the U.S. Senate is now taking a deep look at Tenet's relationships with its physicians. The Senate Finance Committee, led by health care watchdog Charles Grassley, is looking for signs that Tenet has rewarded physicians who've boosted company profits by performing lucrative, but questionable, procedures.

Examination Table

Although the Senate is focused primarily on doctors at Redding -- where hundreds of healthy patients may have undergone risky heart operations -- it has also asked for information relating to at least one other Tenet-owned hospital in California. Specifically, the Senate is examining Tenet's arrangements with the former chief of neurosurgery at Tenet's flagship hospital in Orange County. Tenet suddenly suspended the physician's privileges after the Senate launched its probe. But by then, the physician -- Israel Chambi Venero -- had already been sued dozens of times for performing delicate brain and spinal surgeries on patients who later died or wound up disabled. Venero could ultimately lose his medical license if he's deemed a threat to hospital patients.

By now, Tenet has lost at least three of its most productive California physicians. It has also shed the senior executive who presided over the company's California operations in recent years. In March, Tenet announced that 56-year-old Neil Sorrentino would retire as executive vice president of the company's Western division. Sorrentino assumed the post in 1997, following a merger that made Tenet the second-largest hospital chain in the country. After that, Tenet went on to earn massive profits by focusing on the same lucrative specialties -- such as cardiology and neurosurgery -- that are now threatened by government probes.

Tenet has been particularly successful in its stronghold of California. But Sorrentino -- who oversaw the northern California region that includes Redding before his 1997 promotion -- now faces questions from the Senate about the company's spectacular growth.

Moriarty, for one, expects top executives to pay dearly. He points out that huge fines and penalties -- levied against Tenet after a similar scandal 10 years ago -- failed to keep the company in line.

"It looked like good triumphed over evil" at the time, he said. "But the company just merrily marched forward. ... The question you have to ask is this: Why aren't these people in jail?"