Tenet Doctor Probe Widens

To be fair, the hospital once enjoyed a stellar reputation, boasting everything from robot-assisted surgeries to scenic views of the San Ramon valley. But three years ago, nurses there complained about understaffing and sought to unionize. Diane Ganzell, CEO of the hospital, failed to calm the storm and departed after less than two years on the job. Just weeks later, a powerful nurses union alleged "massive care violations" at the facility. The California Nurses Association claimed that health officials had cited San Ramon for, among other things, failure to both adequately staff operating rooms and dispose of outdated or mislabeled drugs.

A subpoena from the government soon followed. The Office of Inspector General, inside the Department of Health and Human Services, requested documents about arrangements between a group of physicians, San Ramon and four other Tenet-owned hospitals in the region. Then-general counsel Christi Sulzbach quickly downplayed the probe.

"Civil subpoenas for information from the OIG are not uncommon in the highly regulated healthcare industry," Sulzbach said. "And we will cooperate fully so that the agency may complete its inquiry in a timely fashion."

Instead, federal prosecutors have since stepped in, seeking a broader range of information from San Ramon. In addition to "a small number" of physician relocation agreements, they have asked for documents relating to medical directorships that date back to January 2000.

While legal and often useful, medical directorships can also be abused, observers say. Hospitals have come under fire in the past for illegally offering directorships in exchange for patient referrals. If asked, they must supply the government with evidence showing that directors have been paid a reasonable amount for work performed.

"Doctors are supposed to keep track of their activities and document what they're being paid to do," Kleiman explains. "You can imagine how much physicians like keeping time records. Unfortunately, those are the rules of the game."

At least one industry source believes the probe could eventually spread beyond San Ramon.

"I think it's the low-hanging fruit that's being targeted right now," says Peter Young, a business consultant at HealthCare Strategic Issues. "But it doesn't mean that problems haven't been identified elsewhere."

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