Shareholder group accuses HCA of excessive ED admissions
A UNION-LINKED investment group is demanding answers from HCA Healthcare after an analysis uncovered an alleged decade-long pattern of excessive emergency department admissions that may have netted well over $1 billion.
CtW Investment Group cited an SEIU analysis that found the investor-owned hospital chain admits far more Medicare patients who visit its emergency departments than the national average. The union estimates the practice may have netted HCA excess Medicare payments of $1.1 billion over the past five years and $1.6 billion since 2009.
CtW said it is going public with the findings after HCA didn’t respond to its October 2020 letter imploring the company to hire outside experts to investigate the issue, undertake a board-level review to ensure managers don’t benefit financially from such practices, and report back to shareholders no later than Nov. 30, 2020. CtW works with union-sponsored pension funds with more than $250 billion in assets under management that it says are “substantial” HCA shareholders.
Richard Clayton, CtW’s research director, said the firm has yet to hear back from Nashville-based HCA.
“We don’t know if that’s because they don’t believe they’ve got a problem and don’t think it’s serious enough to even respond to. That seems implausible to us. We don’t know if they’re taking steps to address this that didn’t involve engaging with us for some reason,” he said.
In a statement to Modern Healthcare, HCA, which runs more than 180 hospitals, said it reviewed and considered CtW’s letter and remains confident in its compliance with regulatory requirements. The company said it left messages for CtW but did not hear back.
“Our hospitals are staffed by physicians, clinicians and nurses who work tirelessly to ensure our patients receive medically necessary care in the appropriate clinical setting,” HCA said.
After reviewing CtW’s letter, which includes a description of SEIU’s methodology, Michael Shaheen, a partner at Crowell & Moring who formerly worked in the Justice Department’s civil fraud division, said it seems like something HCA should investigate, suggesting that there could be “very significant damages” if litigated. By going public, CtW hopes HCA will take actions to address the problem or reassure the firm there isn’t a problem to fix, Clayton said. If HCA still doesn’t respond, Clayton said CtW will recommend shareholders vote against the re-election of incumbent board members at its next annual meeting.
Douglas Grimm, healthcare practice leader with Arent Fox and a former hospital CEO, said he doesn’t understand why CtW would go public with its letter rather than continue to work toward an internal dialogue with HCA. He has no doubt HCA has looked into the issues, but said the Nov. 30 deadline was “extraordinarily aggressive.”
SEIU relied on inpatient and outpatient Medicare claims to calculate both a national emergency department admission rate plus expected admission rates for each of HCA’s hospitals in each federal fiscal year. The analysis found that HCA’s admission rate was only 3 percentage points above the national average in 2011 and double that by 2016. It also found that as of 2018, nearly half of HCA’s hospitals had admission rates above the 80th percentile nationally, compared with closer to one-third between 2008 and 2011.
SEIU is hardly an unbiased source when it comes to HCA. The union has rallied against HCA’s handling of the pandemic, accusing the company of failing to provide adequate personal protective equipment and other safety precautions. A chapter in California sued HCA over the issue in August. ●