Lack of Transparency (and Bribes) Nearly Allowed Hospital to Commit Highway Robbery

googlemapsNear my old office just off U.S. Highway 75 in Dallas sits a hospital that was originally built by physicians. It is close to a hospital medical district, known as Medical City. Forest Park Medical Center was part of a small chain of investor-owned, for-profit hospitals. They are now bankrupt and have been sold off to bigger hospital systems.

At the time of its construction, the business writers were posting glowing articles about how these investor-owned facilities were going to provide better care for patients. The facility near my office was very nice. According to interviews, the chain was designed to attract wealthy patients who would not mind paying a little extra for five star amenities. What I did not know was the setup was largely a scam. This type of fraud is characteristic of health care. The hospitals purposely refused to join networks so they could bill charges far above the norm – knowing some patients would be none the wiser while others would have their share of the outrageous bills written off.

Here’s how it worked. The chain would not affiliate with any network, allowing the hospitals to charge higher prices than surrounding hospitals. Much, much higher in some cases. They avoided Medicare and Medicaid — selling those leads to others — as those payers would not reimburse them. Forest Park sought out patients insured by large employers, BlueCross, CIGNA, UnitedHealth, etc. The hospitals would bill employers and insurers high prices and then balance bill patients when possible. Obamacare’s narrow networks and increasing use of HMO coverage rendered the business model unprofitable and put the chain out of business.

It just came to light that Forest Park also paid bribes and kickbacks to doctors in return for referring their unsuspecting patients to the facility. Twenty people at the facility have been indicted on federal charges for a massive bribery and kickback scheme that paid $40 million to doctors for steering patients to the facility.

Comments (8)

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  1. Ron Greiner says:

    You bet these medical providers can be a big part of the problem. People like Dr. Ben Carson say that HSAs let doctors and patients deal with each other over prices with no insurance middle man. That is absolutely wrong.

    These providers should just list their prices in advance like every other service provider in the world.

  2. Lee Benham says:

    Maybe doctors should charge an hourly rate vs a per treatment rate.

    Better lawyers charge more than others so why not Docs..

    Maybe the guy who graduetes first in his class from Harvard can charge more per hour than the guy from Stanford..Someone might be willing to pay the higher per hour rate.
    Some may not…

    My auto mechanic gives me a hourly rate with an estimate. Why shouldn’t a Doctor or surgeon do the same thing?

    • Ron Greiner says:

      The surgeon that billed my son $36,000 for 2 hours of his time didn’t go to Harvard because he doesn’t speak English.

      Come to America and rip off Americans.

  3. Devon Herrick says:

    This is a more egregious example. But similar scams cause patients to select facilities without knowing cheaper alternatives exist. I suspect state legislatures will pass numerous laws next year dealing with out-of-network scams.

  4. Lee Benham says:

    The Docs and Hospitals will just change tactics. Politicians will always be a day late and Millions of tax payer dollars short.

  5. Devon Herrick says:

    Apparently the first settled kickback charges three years ago. Apparently that was just the tip of the iceberg!

  6. Bob Hertz says:

    Lee, the doctor does not give you an estimate because up until now, hie medical bills are legally collectible no matter what. I am not a lawyer, but in every actual challenge I have read about the medical provider prevails.

    When we have strong national laws to protect patients, then a doctor will gladly disclose rates.

    • Devon Herrick says:

      Lee and Bob,

      Doctors/hospitals also do not provide an estimate because: 1) they are not competing on price; 2) they likely do not even know the price since they signed contractual agreements with networks that do not have bundled (packaged) prices.