Wednesday, May 17, 2006

Tenet Shows It Knows When to Fold 'Em

The Department of Health & Human Services' Office of the Inspector General tried to wipe out Alvarado Hospital in San Diego by initiating a proceeding to bar it from participating in federal healthcare programs, a death sentence for any provider in the field (see earlier post here).  Tenet Healthcare Corp, Alvarado's corporate owner, decided to avoid a nasty fight by agreeing to divest itself of the hospital, which appears to have satisfied OIG because the agency has now dropped its threat to exclude Alvarado from the federal programs.  According to an OIG press release (here):

Today’s agreement allows for the orderly transfer of the hospital to a new operator in a manner that would not affect access to hospital services in the community. If Tenet chooses to close Alvarado, OIG will work closely with the Centers for Medicare and Medicaid Services and state and local authorities to ensure community access to emergency and other hospital services.

Putting Kenny Rogers' advice to good use likely saved both sides from a drawn-out legal battle that Tenet probably could not win without expending significant resources.  The question now is whether this will also resolve the criminal charges against the hospital and its former CEO, a case that has been tried twice and resulted in two hung juries   (see below) (ph)

                                                                                                      

UPDATE:  In addition to the HHS announcement, the U.S. Attorney's Office for the Southern District of California announced (press release here) that it has reached a settlement with Tenet in which the company will pay a $21 million civil penalty, and the government will not pursue a third trial on the charges against Alvarado and its former CEO.  (ph)

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