Wednesday, October 08, 2014

Four years ago, Rick Scott bought his way to the Governor's Mansion: it is time for Florida voters to fix that mistake … by gimleteye

Props to the Miami blog, Random Pixels, for bringing the roots of the Rick Scott disaster to the fore. 

We've seen the video of Rick Scott claiming memory loss during a deposition … but Random Pixels highlights recent comments by the journalist who covered that Rick Scott episode and the civil fraud of Columbia/HCA.

Random Pixels writes: if Rick Scott is re-elected, Floridians will deserve ever bit of ridicule the rest of the nation will heap on us. Read on, including the background how the New York Times discovered the real Rick Scott …

'Rick Scott was one of the 2 creepiest criminals I ever met.'

In the mid-90s Kurt Eichenwald was a senior writer and investigative reporter at The New York Times, writing about "corporate corruption and related topics," according to his bio on the Times' website.
"In 1998, [Eichenwald] won a Polk Award ... for a series of articles about allegations of corruption at the nation's largest private hospital chain, the Columbia/HCA Healthcare Corporation."
Columbia/HCA Healthcare Corporation is, of course, the company that Rick Scott founded and headed before being forced to resign in 1997.

So if anyone knows about Rick Scott, it's Kurt Eichenwald.

Yesterday, after a whistleblower spoke at a press conference calling Rick Scott "the leader of a criminal enterprise," Eichenwald - a journalist who probably knows more about Scott's criminality than anyone - took to Twitter, unleashing a blizzard of tweets about his dealings with Scott.

Sure, we all knew about this four years ago when Scott showed up out of nowhere and bought the election.

But this time around there's no excuse.

If Rick Scott is re-elected, we as Floridians will deserve every bit of ridicule that will no doubt be heaped upon us.

Brill's Content
August 1998
How The New York Times Nailed A Health Care Giant

Columbia/HCA built a hospital chain worth billions that won press plaudits and Wall Street raves. A team of determined New York Times reporters -- armed with millions of database records and given more than a year to pursue the real story -- proved the empire had no clothes.

Early on Wednesday morning, March 19, 1997, federal agents in El Paso, Texas, raided two hospitals and several related facilities run by or affiliated with Columbia/HCA Healthcare Corp. The agents ordered employees to back away from their computers, relinquish their passwords, and leave the premises. Soon the agents were dollying hundreds of thousands of pages of financial, billing, and medical records into a fleet of Ryder rental trucks.

For those who had read Fortune magazine a few weeks earlier, the scene was undoubtedly puzzling. Columbia - the giant, for-profit hospital chain - had just been voted the country's "most admired" health care company by the industry's senior executives, outside directors, and Wall Street analysts.

It was equally mystifying to those who had read Time magazine eight months earlier, when Columbia's founder, chairman, and chief executive officer, Richard Scott, had been lauded as one of the 25 most influential people in 1996 for having imposed market discipline on an industry notorious for waste and inefficiency.

Like many other publications and experts, Time had depicted Nashville-based Columbia pursuing a business strategy that seemed to benefit society and shareholders alike. By buying hospitals and related health facilities-surgery centers, diagnostic testing laboratories, home health care units, skilled nursing homes - Columbia could offer more efficient, integrated services while gaining enough market clout to demand steep discounts from suppliers and contractors. The company could then charge lower prices, enabling it to capture business from the managed care companies that increasingly controlled the delivery of health care, including treatment of Medicare and Medicaid patients. (Medicare fees have typically accounted for more than one-third of Columbia's revenue; the chain was Medicare's single largest biller.) Columbia's shareholders would profit while health costs would fall for patients, insurers, employers, and the government. Everybody would win.

Then why were agents of the FBI and three other federal law enforcement agencies storming Columbia's offices? The mystery was dispelled nine days after the raids, when The New York Times published the first installment of its four-part, 16,878-word investigative series on Columbia.

As the Times's articles revealed, the fast-growing chain was a company that made its money not so much by cutting costs, as by raising prices; a company that did not appear to be saving the government money, as it claimed, but to be systematically fleecing it in myriad ways; a company that was not so much the savior of America's health care system, as a parasite upon it. Although skeptical or critical pieces about Columbia had appeared in the media before the series, the Times was the first to suggest the company might be defrauding Medicare. Significantly, the Times was also the first to lay out droves of statistical evidence strongly pointing to that conclusion.

Despite its timeliness, the series was not triggered by the raids or fueled by leaks from the federal investigation that led to those raids. On the contrary, the Times's probe, written primarily by Martin Gottlieb and Kurt Eichenwald, was initiated without any conventional "lead" at all and long before the federal probe had even begun. It started simply because the newspaper's editors believed Columbia represented an important new force in health care whose operations demanded illumination. The newspaper allowed four reporters to spend 15 months working on the project before publishing a single word-consuming an estimated $625,000 in Times resources along the way (see box, page 106). The investment yielded one of the decade's best examples of public service journalism.

The Times's series would have been impressive had it rested merely on the testimony of hundreds of sources from inside and outside Columbia in dozens of states, and been backed up by documents that had surfaced in lawsuits or been leaked directly to the reporters. The Times got to those sources and documents, but it did not stop there. Instead, the reporting was corroborated by the paper's own statistical analyses of numerous databases, including more than 30 million billing records that encompassed every Medicare patient treated in any Florida or Texas hospital in 1995.

In July 1997, two months after the last of the Times's stories ran, hundreds of federal officers raided Columbia properties across seven states. Shortly thereafter, CEO Scott and Columbia's president, David Vandewater, were ousted in a boardroom coup, fraud indictments of three mid-level Columbia executives in Florida were unsealed, and Columbia itself was named as a target of the ongoing criminal investigations. In the ensuing months, ten more top executives were replaced, and the company's new chief executive, Thomas Frist, Jr., junked virtually every key aspect of Scott's previously exalted business plan.

"The Times did a very thorough job of investigating the company," acknowledges Jeffrey Prescott, a spokesman for the post-Scott Columbia. Prescott and Frist, who had been vice chairman under Scott, decline to comment more specifically. "We're still right in the middle of this whole event," says Prescott. Scott, through his criminal defense attorney, Gerald Feffer of Washington, D.C.'s Williams & Connolly, declined to be interviewed for this article.

In June 1995, veteran reporter and editor Gottlieb, then 47, was beginning his third tour at the Times. His career had included stints as editor of the Village Voice and, more recently, managing editor of The New York Daily News. As the projects editor on the Times's national desk, Gottlieb's portfolio included the development of major investigative projects in the health care field. In December 1995, he proposed exploring Columbia as a way to look at the broader changes taking place throughout the health care industry.

With the collapse of President Clinton's health care-reform bill in 1994, several journalists, including those at the Times, had noted that Rick Scott was effectively enacting his own health care-reform package. The Scott method allegedly would achieve cost savings through bold innovation and the deft management of private enterprise, rather than through the plodding paternalism of government bureaucracy.

Although the story idea was amorphous, Gottlieb takes pride in his ability to pursue such ideas. In his view, he came into his own as a reporter when he learned "how to go into a story simply because something is percolating there and you sort of know it," he says. "You have no tip in the world to work on. It's like blue-skying. You're not doing someone's dirty work."

Gene Roberts, then the managing editor of the paper, swiftly approved Gottlieb's idea. Gottlieb initially estimated it might take him three months to complete the project. Because Gottlieb was not a business reporter, senior editors suggested adding Kurt Eichenwald to the team. Eichenwald, then 34, had been a Times financial reporter since 1988 and had just completed a series of stories about the kidney dialysis industry. Says Eichenwald: "It was presented to me as, 'Okay, you're doing business and drifting over into health, and Marty Gottlieb's doing health drifting over into business, so why don't you two hook up?' "

The combination produced a good-cop, bad-cop team. Gottlieb is a slightly heavy man with a pensive, mild-mannered demeanor and a baritone voice that forms qualified, meandering sentences at a leisurely pace. Eichenwald, in contrast, is high-strung, aggressive, and prickly, with a machine-gun laugh reminiscent of actor Richard Dreyfuss.

"Basically, the assignment was: Understand Columbia," recalls Eichenwald. The general contours of Columbia's phenomenal rise were well known in the business press. Scott, a mergers and acquisitions lawyer in Dallas, had launched the company in 1987 with the backing of Fort Worth investor Richard Rainwater. Scott bought two struggling hospitals in El Paso, and then, through snowballing acquisitions, rapidly expanded the company. When the Times completed its investigation in early 1997, Columbia ran 343 hospitals, employed about 285,000 people, and was generating annual revenue of nearly $19 billion. Its annual profit had leaped from $120 million in 1991 to $1.5 billion in 1996; its market value stood at $27.4 billion.

From Eichenwald's perspective, Columbia's extraordinary success at a time when payments from private and government health care sources were getting stingier posed an obvious riddle: How was the company making its money? "I've seen acquisition profits," he says. "You buy something, you strip it down, and you get a big boost. . . . But this place was taking hospitals, stripping them down, getting a 20 percent earnings growth, and then demanding another 20 percent earnings growth the next year, and then another one the next year. I kept going, 'I don't get it.' "

In the stories about Columbia that had appeared up to that point, company officials had often attributed their success in part to volume purchasing. To Eichenwald, however, that explanation for helping Columbia achieve its scale of success was terribly incomplete.

"You can get a better deal [that way]," Eichenwald says, "but that doesn't translate into 15-20 percent earnings growth a year." Moreover, as he and Gottlieb discovered early in their reporting, many of Columbia's nonprofit competitors had used volume purchasing for years through purchasing cooperatives. "The shrewdest nonprofits are huge, huge enterprises," adds Gottlieb. "They know how to buy as well as anyone." So answering the simple question of how Columbia achieved its superior profits became an important goal of the Times's inquiry.

From the outset, Gottlieb had suspected that database analyses might be useful for the project. Federal and state agencies kept extensive data on hospitals. "That's why I was interested in bringing in [Joshua] Barbanel," Gottlieb explains. Barbanel, then 43, had been a Times reporter since 1980, and in recent years had been schooling himself in computer-assisted reporting. "I'm not a computer expert," insists Barbanel. "I'm a journalist trying to use these tools to solve journalistic problems."

Gottlieb hoped that statistical analysis could, for instance, shed light on Columbia's controversial practice of giving key admitting doctors financial interests in the company. Complex federal laws bar doctors from referring patients to outpatient facilities in which the physicians hold financial interests. But those laws do not always bar investments in hospitals, and Columbia's lawyers maintained their doctor investments fell safely within those exceptions. A separate federal anti-kickback law, however, also barred hospitals from giving doctors anything of value in exchange for referring Medicare patients to them. If Columbia's doctor investments were designed to induce doctors into referring patients, then they arguably violated those anti-kickback statutes.

Not surprisingly, Columbia adamantly denied its investments served that purpose. Rather, as Scott later explained to Gottlieb, the investments served benign, if vague, objectives. "If someone has an ownership interest in something," Scott told Gottlieb, "they take pride in that, and so they will try to have whatever impact they can."

To see if they could empirically test the impact of doctor investments on referral patterns, the Times trio flew to Tallahassee, Florida, in February 1996 to find out what records were available from the Florida Agency for Health Care Administration. Columbia had refused to identify the doctors who held financial stakes in its facilities, citing privacy concerns. But Florida law required semiannual public disclosures of such interests.

Using these public filings, and patient discharge records, Barbanel thought he could design an appropriate study of referral patterns. Accordingly, he obtained from the agency 9 million patient discharge records covering a five-year period (1992 to 1996), as well as physician license records and hospital records from Broward and Dade counties listing physician ownership interests. "It was beyond any type of data collection I can recall," says Colleen David, the agency's then-spokesperson.

But that was only a small fraction of the data Barbanel wanted. While the Florida records allowed him to study referral patterns, they revealed little about Columbia's billing practices. To explore that topic, he turned to the biggest medical bill payer in the country, Medicare, whose records were kept by the federal Health Care Financing Administration.

After consulting the medical literature and getting advice from researchers in the field, Barbanel decided to seek all inpatient records for 1995 for Texas and Florida-the states where Columbia had the greatest presence-and all the corresponding outpatient records for the same patients. In spring 1996, Gottlieb approached the agency with Barbanel's request.

Then-chief administrator Bruce Vladeck remembers determining that the Times was entitled to the information under the Freedom of Information Act, but he acknowledges his employees "were a little put off and intimidated by the magnitude of the request." To preserve privacy, the agency encrypted the patients' official identification numbers consistently across all files, so the newspaper could track each patient's treatment through different facilities.

By the summer, HCFA had turned over five years of hospital cost reports from Florida and Texas-the voluminous filings each hospital makes annually to seek Medicare reimbursement-as well as 9.6 million inpatient, outpatient, nursing home, and home health care records, and 32.8 million related physician bills. The data were provided on 89 computer tape cartridges; Barbanel used the Times's mainframe computer and his own PC to crunch the numbers.

Meanwhile, Eichenwald and Gottlieb had been attacking the assignment through old-fashioned gumshoe techniques. Eichenwald started by flying to Corpus Christi, Texas, where a doctor had filed a whistle-blower suit against Columbia in March 1995, alleging that the company's doctor investments were illegal. Soon, Eichenwald and Gottlieb were pursuing leads all over the country. At Gottlieb's request, Tamar Lewin, then 47, was added to the team to focus on broader, industry-wide issues.

Lewin's addition allowed Eichenwald and Gottlieb to focus on investigating alleged improper payments to doctors and hospital administrators, on documenting Columbia's carrot-and-stick incentives programs to push administrators to hit financial targets, and on assessing whether such incentives ever tempted administrators to cut corners on the quality of care at Columbia hospitals.

The last inquiry proved especially difficult. Although the reporters uncovered several anecdotal horror stories-a neonatal intensive care unit in Indiana, for instance, had become so life-threateningly understaffed in 1996 that state health inspectors intervened and fined Columbia - they could draw no generalizations about the overall quality of Columbia's 343 diverse hospitals. "In the end, we could not conclude that the quality of Columbia's care was markedly different, for bad or for good, than other [hospitals]," Eichenwald acknowledges.

As they eventually reported, Columbia scored well on the yardsticks of minimal quality tracked by the hospital industry's accrediting agency. (Criminal investigators are now scrutinizing whether Columbia filed false records with that agency.)

The reporting proceeded slowly, fitfully, and chaotically. In one month, Eichenwald says, he traveled to 11 different cities. Both reporters marvel at the time, latitude, and resources the newspaper gave them to explore. "There was never a sense from the Times of, 'Okay, when are you gonna deliver?' " says Eichenwald. "It was, 'When you're ready, let us know.' " As a result, he continues, "you had the ability to say, 'Let's go down this avenue,' knowing that if it didn't pay off, that wasn't necessarily the end."

They went down lots of those avenues. Gottlieb headed to South Carolina and Eichenwald to Texas, researching Columbia's political lobbying and political action committee fund-raising-an aspect of the story that never saw the light of day. Gottlieb and Eichenwald spent a week in Destin, Florida, and Gilmer, Texas, respectively. Columbia had acquired a community hospital in each town and then closed both, forcing residents to use a Columbia hospital in the next town. In Gilmer, an asthmatic child had died in a medical emergency that arose shortly after the local hospital was shuttered, leading to recriminations over whether he might have survived had it remained open. "They were both great stories," says Gottlieb of the Destin and Gilmer hospital closings. "I had boxes of stuff on Destin."

But neither story was ever published. Recognizing that two stories would be too much, Gottlieb agreed his research should give way to Eichenwald's account of the fresher events in Gilmer. Editors eventually cut the Gilmer story, too, due to concerns about fairness. Columbia could make an arguable case, Eichenwald explains, that the community was simply too small to support its own hospital. Even when Eichenwald tried to reframe the story as a generic one about the problems facing rural hospitals, he continues, the story still "would be looked on as an indictment of Columbia, which we weren't prepared to make." (The Times declined to permit its highest-level editors to be interviewed by Brill's Content, citing concerns over preserving legal privileges.)

An intriguing subject that did win space in the final series was the practice known as upcoding. "I was hearing early on from some nonprofit hospital people," says Gottlieb, "about the potential to 'upcode' - to bill the government for something more than what you were treating the patient for." In an effort to rein in the cost of hospital care, the Medicare agency reimburses inpatient hospital treatment on a fixed-fee basis rather than on the more generous cost-based system used to cover outpatient visits. The amount of the fixed fee hinges on which of the approximately 490 diagnoses - each with its own numerical code - a hospital claims the patient suffers from. Upcoding is the practice by which an unscrupulous administrator assigns patients to more lucrative codings than are appropriate.

One day, when Eichenwald and Gottlieb were in a hospital together, they asked the employees determining the codes about the issue. "And one of them said, 'Yeah, when Columbia took over, they gave us a list of these focus codes they thought could be boosted up,' " Gottlieb recalls.

Based on a second coder's tip, Gottlieb asked Vladeck, the head of the Medicare oversight agency, to check whether a small Columbia hospital in Spring View, Kentucky, showed signs of upcoding. Vladeck ran analyses on that hospital and four nearby.

By January 1997, Gottlieb and Eichenwald began pulling together the results of their sprawling investigation. The task proved maddeningly difficult. "This thing went through five or six top-to-bottom rewrites," says Gottlieb. The chief hurdle was that most Times readers had never heard of Columbia, since it operated no hospitals in New York, Connecticut, or New Jersey. The reporters therefore had to present a mountain of explanatory material before they could reach the heart of the matter: that evidence suggested Columbia was breaking the law. While the paper's business readers would have been familiar with Columbia, these stories were not slated for the business section. "You have to raise the accessibility many, many levels when it's on the front page," explains Eichenwald.

The logjam broke dramatically on the March morning when federal agents searched Columbia's El Paso hospitals. The raids instantly solved the problem of finding a peg for the series. "In the barest, most essential journalistic terms, it gave us a hook," says Gottlieb. Events had written the initial headline for them: Biggest Hospital Operator Attracts Federal Inquiries.

The first story in the series, a 3,607-word, front-page article focusing on allegations of illegal conduct, appeared nine days after the raid, on Friday, March 28. The second, a 3,537-word, front-page piece on the controversies surrounding doctor investments, ran April 6. Lewin's 3,714-word, front-page article, detailing the questionable diversions of charitable assets that took place when for-profit chains acquired non-profit hospitals, appeared on April 27. The final installment, a 6,020-word story about Columbia's "brass-knuckle" tactics, was published on the first page of the business section on May 11. The last three stories ran in the Sunday Times, which has a national circulation of 1.6 million, compared to the daily's more regionally concentrated readership of 1.1 million.

"Beyond exhaustion" is how Gottlieb remembers feeling by the time the final article came out, 17 months after the investigation began. He was grateful, he recalls, to be able to turn to his new duties as deputy culture editor, a post he had taken in January 1997. After the series ended, Barbanel and Lewin also were engaged in new projects. For Eichenwald -whose wife was then pregnant - there would be no rest for the weary. Columbia had turned into a running story, and it fell to Eichenwald to cover it. Working alone in the subsequent months, he kept his paper a step ahead of The Wall Street Journal on most of the breaking news, though the Journal deployed at least seven veteran reporters to cover Columbia.

Today, Columbia is under federal criminal investigation for allegedly filing fraudulent annual cost reports; fraudulent laboratory billing practices; improper financial relationships with doctors; fraudulent diagnostic coding practices, such as upcoding; and fraudulent filings with the hospital industry's accreditation agency. The company is also under scrutiny by the Securities and Exchange Commission and faces dozens of private civil suits. Although some analysts have recently turned bullish on Columbia, in the hope that regulators will allow it to pay a manageable fine and move on, the company acknowledges in its public filings that setbacks in its various legal proceedings could have a "materially adverse impact on the company's liquidity, financial position, and results of operations" - in other words, its survival.

In the end, the achievement of the Times was not in pinpointing the precise forms of wrongdoing in which company officials may have engaged, but rather in exposing Columbia's diseased corporate culture, despite the shield of respectability its size and wealth had conferred upon it.

What Eichenwald is most proud of, he says, is the fairness and restraint of the project. "There's a reality here," he says. "When you're writing about a public company, you're talking about an entity that is the employer of a lot of people-a central portion of thousands of people's lives. . . . If you just go for a story out of competitive concerns, or out of any reason other than 'This is true,' then I don't think you've lived up to your duty as a reporter."

Gottlieb hopes the story might make a broader contribution, beyond what it revealed about Rick Scott's Columbia. "I always felt it was absolutely fair game for the media, the think tanks, and the health care experts to take hard looks at the Clinton health plan," he says. What has now effectively replaced Clinton's plan - turning over the problems of health care to giant hospital chains, for-profit insurers, and managed-care entrepreneurs - has not yet received equal attention, according to Gottlieb. "Even though there's been no formal declaration, this is the health care policy of the country," he says. "It needs the same scrutiny anything coming out of Washington needs. If we gave it that, I think we performed a service."


Anonymous said...

It's astonishing that 1998 brought a conservative wave to Florida, with the election of Jeb Bush as governor; a wave that touted privatization as the apex of achievement. The emperor has no clothes, but the Fox News megaphone is so disruptive it is unclear voters are paying attention.

Anonymous said...

November will be another chance to vote against one's best interest by the believers.

Anonymous said...

Rick Scott uses his personal E-mail accounts and other tricks to avoid the Freedom of Information Act.

Anonymous said...

Are you saying we should vote for Charlie Crist who is always job hunting?

Do you really know what you are asking?

Crist is the last person I would vote for to even catch my dog.

That is because I know him too well.

Going from Chain Gang Charlie to a liberal Democrat is his biggest joke yet.

If Crist thought he had to return to the Republican Party for something he needs really badly, he would jump up and try to get back in at whatever cost.

Supporting Crist is like supporting a Mexican Jumping Bean. He has no problem going from here to there while he is smiling in your face and shaking your hands.

I don't trust Charlie even when I am looking at him.

Anonymous said...

Above Anon:

So do you trust Rick when you look at him?

Anonymous said...

So just how do you vote for. Scott or Crist? Why did the Dems only put Crist out there?

Anonymous said...

You vote for Scott if you like what he did in the last 4 years and you vote for Crist if you didn't. The Dems put up Nan Rich but not enough people voted for her in the primary to secure her a spot on the ballot. I'm holding my nose and voting for Crist. He has to be better than 4 more years of Scott.

Anonymous said...

Comparison chart of the Candidates for Florida Governor:
Vote Adrian Wyllie

Anonymous said...

Wylllie is consistently awful.
Scott is a crook coming and going.
I will take Crist, the Changeable Animal.