Bad Debt Hammers HCA

Following HCA's warning, Tenet said on Tuesday that federal prosecutors have launched new investigations of two Southern California hospitals that were already under scrutiny. The U.S. Attorney's office in Los Angeles has asked for coding and billing information related to 353 cases handled by the Comprehensive Cancer Center at Tenet's Desert Regional Medical Center in Palm Springs. The same office is also requesting information about the relationship between Tenet-owned Centinela Hospital Medical Center in Inglewood and an independent home health placement service.

Desert Regional is already under investigation for its aggressive collection of generous Medicare "outlier" payments in the past. It has also been highlighted for operating one of the most expensive operating rooms in the country and charging high prices -- for cancer treatment in particular -- by local newspaper The Desert Sun. In addition, the Sun has reported, the same hospital has been sued for allegedly defrauding Medi-Cal and last year paid a fine for improperly disposing of its medical waste.

If anything, Centinela faces even harsher allegations. The hospital is one of seven Tenet-owned facilities in Southern California being questioned about its financial arrangements with local physicians. It is also one of three in the area that has seen its cardiac unit attract increased government scrutiny. Moreover, the Los Angeles Business Journal reported last month, the hospital's busiest cardiac physician practice has fielded a subpoena of its own.

Tenet has already paid a record-setting fine to settle allegations that it profited from unnecessary cardiac procedures carried out by its busiest heart surgeons in Redding, Calif. The company has since stated, in its latest annual report, that it believes that "all aspects of its relationships with physicians potentially are under review."