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Wednesday, August 23rd 2006

Indian Giver!

The politically correct term.

USC is suing to force Tenet Healthcare to sell them “back” USC University Hospital.

USC and NME Hospitals, Inc., which changed its name to Tenet Healthcare in 1992, entered into an agreement in 1985 to develop and operate a future hospital, and USCUH opened in May 1991 under the administrative control of NME.

They resigned the lease in 2004 with NME’s successor Tenet (the lease goes through 2043). So what is going on? They claim financial problems at Tenet have not enabled them to make necessary improvements to UHH.

The AP and Bloomberg picked up the story and provided pieces.

Tenet’s problems largely stem from multiple federal and state investigations into coding practices and basically ripping off the government. An August 20th NYT piece is subscription required.

From the Daily Trojan article,

On June 30, the Los Angeles Times reported that Tenet would sell 11 of its remaining 68 hospitals to help cover the cost of the $900 million settlement. This fire sale comes two-and-a-half years after Tenet sold 27 of its 96 hospitals “to concentrate on the USC University Hospital and other core facilities. The goal: to develop long-term growth and stability,” USC said in a January 2004 statement.

Since 2002, Tenet Healthcare has been investigated by six federal agencies, including the DOJ, the Department of Health and Human Services and the Internal Revenue Service. The $900 million settlement was in response to the DOJ’s conclusion that Tenet had siphoned more than $1 billion in excess outlier payments from Medicare since 2000, the complaint stated.


In January 2003, the DOJ alleged that Tenet had “upcoded” – the process of falsifying diagnosis codes to receive greater reimbursement – on 19,300 claims from 1992 to 1998 and collected as much as $115 million in undeserved Medicare revenue. Tenet was fined between $5,000 and $10,000 for each violation.

“There was definitely a factor with some of the governmental regulatory operations. Because of the governmental actions, they’ve been impaired,” said Terry Fahn, a spokesperson for Sitrick and Company, a public relations firm representing USC.

The hospital is a joint operation and located on the school’s health science campus. The suit, if USC is successful, would force Tenet to sell them the hospital at a price to be determined by an outside appraiser.