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This page examines
Tenet/NME's founder and the disturbing culture which
developed in the company under his leadership.
Founders
National Medical Enterprise was founded by three lawyers. Richard Eamer seems to have been the driving force. He became chairman and CEO. Leonard Cohen was a dark horse and there is very little information. He was forced out at the same time as Eamer in 1993. This may be because he, rather than Eamer was the architect of NME's philosophy, the mind behind the theory and the designer of the business practices. It is difficult to see why he was pushed out unless he was intimately linked to what happened. In contrast John Bedrosian the third partner was not fired until some time later.
Bedrosian seems to have been the least
intelligent of the three. He was put in charge of public relations
and dealing with shareholders. He was the public face and presented
the arguments for marketplace medicine in public debates. That his
arguments were flawed did not matter. The company's enormous success
in the marketplace made them irrelevant.
His deficiencies and his inability to grasp the issues became most apparent when they were most needed in the 1990's scandal. In appearances like that on Australian television in October 1992 he denied, misinformed and deceived. As these inept explanations and deceptions were exposed he came under increasing pressure finally admitting during cross examination that when he gave this information, and when he presented to the Texas senate inquiry into NME's practices he was simply "singing to the choir". It became clear that to NME and Bedrosian dishonesty was legitimate if it was done in the interests of the company. He became too much of an embarrassment and was fired. He sued the company for wrongful dismissal. Bedrosian commenced a long and costly court action claiming wrongful dismissal. He was awarded $148 million.
The latest unsettling news in a seemingly endless string of travails to hit the nation's second-largest hospital operator comes after a California appeals court turned a $9.2 million dollar judgment against the company into a $253 million award.
Prosecutors Widen Probe of Tenet Reuters October 31, 2003Tenet Healthcare Corp., Santa Barbara, Calif., said it will appeal a $253 million judgment awarded by the 2nd California District Court of Appeal to a founder of Tenet's predecessor company, National Medical Enterprises (NME), in a breach-of-contract case. Tenet said it would ask the appeals court to reconsider its ruling, and, if that request fails, would appeal to the California Supreme Court. NME co-founder John Bedrosian sued NME for breach of contract after the hospital company fired him as executive vice president in September 1993.
Tenet to fight $253 million award to NME founder Modern Healthcare's Daily Dose Oct. 30, 2003The court declined to review the full ruling, but it changed the way interest is calculated on the award to Bedrosian, reducing total damages to $148 million. Tenet said it still plans to appeal the case to the California Supreme Court.
Tenet manages to reduce award in Bedrosian suit Modern Healthcare's Daily Dose Nov. 26, 2003The bad news is the court denied the company's petition to appeal a $148 million breach-of-contract judgment awarded last fall to John Bedrosian - - - .
Tenet stuck with paying NME founder $148 million Modern Healthcare's Daily Dose Feb. 19, 2004
We have most information about Richard Eamer, the chairman and CEO. He was the driving force in organising and implementing NME's policies. He received monthly reports. He was the person who from his office monitored the collection of financial data. He set out the financial results he expected each hospital to achieve (called plan), recording whether the hospitals "met plan" or not and praised, rewarded, penalised or fired depending on the extent to which they did so. "Exceeding plan" was the ultimate achievement for each hospital executive. Eamer had a lieutenant in Norm Zober in charge of the specialist hospitals, and a team of enforcers, who were sometimes called "the Gestapo" by critics. It is likely that Eamer did know what was involved in securing plan. He received detailed monthly reports from Zober. He turned a blind eye to the consequences of what he was doing for the patients his organisation was supposed to care for.
NME's business model and the patterns of thought were enormously successful in the marketplace. It was praised by analysts and could do no wrong. A deviant and resistant culture was built up around these successful marketplace beliefs. To the businessmen they were self evident and obvious reforms needed to the medical system. Professionalism was obsolete. Health could be parceled into products that could be marketed and traded in the market place like any other commodity.
This ideology perfused the entire health care marketplace spreading to HCA and into aged care. NME's particular brand of ideology seems to be built on a set abstractions further removed from reality than most others. It was spread through the system as others poached its indoctrinated and highly trained administrators.
NME owned the aged care chain Hillhaven and Eamer was chairman. Its culture and business philosophy spread from Hillhaven through mergers and offshoots to Sun Healthcare, Horizon, and Vencor (now Kindred Healthcare), as well as Integrated Health Services and HealthSouth which jointly purchased and dismembered Horizon.
In spite of criminal convictions, fraud
settlements, integrity agreements, ethics committees, injunctions and
other restraints the culture persisted in Tenet and then flourished
again after these restrictions were lifted resulting in an even more
disastrous scandal in 2002 - one which we can only hope will destroy
the company.
Richard Eamer was the driving force in the company. He defined and built its culture.
From the reports I deduce that he suffered from bipolar disease (a manic depressive) for which he took lithium. We have information from an article in the Wall Street Journal, January 1993 which paints a picture of a rather bizarre and unpredictable personality but with a fixation on the bottom line.
Like Richard Scrushy in HealthSouth he set out what he wanted and insisted on getting it. He did not ask how but rewarded compliance richly. He was scathing about failure. Where Scrushy told his accountants what he wanted Eamer told his hospital administrators. He specified the amount of money he wanted from each hospital. His team then translated this into the required number of admissions, how long they should stay and how much money should be obtained from each patient each day. Hospital managers had to produce to survive. Successful achievement of these goals was faithfully reported to the stock market who identified with and praised every disastrous measure.
The wall Street article does not describe Eamer's philanthropy. He was a great philanthropist giving large sums of money to a university in California. The university named an important building the Richard Eamer Pavilion.
Like his friend Jeffery Barbakow 10 years later Eamer was totally unable to understand or accept the scandal that had engulfed his company and which his policies were responsible for. He continued to deny and to make claims which were wide of the mark. Many in the company accepted his view and this persisted. Company staff were denying even after the guilty plea and massive US $379 million fine in 1994.
A few months after Eamer's unrealistic denials in the January 1993 article quoted below Eamer was forced to resign. A year after this investigations had shown problems in vast numbers of NME's hospitals across the country. It reached a negotiated criminal plea which enabled it to survive.
In 1996 I gave a paper which described NME's culture and this was published. A version is on this web site. In 2002 10 years after Eamer resigned The company is involved in a remarkably similar scandal involving predatory pricing and unnecessary cardiac procedures. The persistence of its culture can be readily traced.
An excellent article in the Wall Street Journal in January 1993 describes Eamer and the company's culture. At this time, a year after the scandal broke NME was still claiming that the problems were isolated to a few hospitals in Texas and were not systemic (6.4, 6.5). It had all been fixed. Eamer denied or explained away all of the allegations and I have not quoted all of these denials.
A new set of pages has been added to the web site describing and analysing this replay of NME's scandal under its new name Tenet Healthcare , but 10 years later in 2002.
I will let extracts from the 1993 report tell the story better than I can and simply add comments and links to the scandal in 2002. By then everyone was practiced in dealing with corporate fraud and it moved far more rapidly.
National Medical Profit Push Is Alleged To have Led To Unneeded Treatment :: CEO Calls Charges Unfair
But the 64 year old founder -
who once wore to a media interview about the scandal a sweatshirt
proclaiming, "I'm not arrogant. I'm just always right" - remains
unapologetic. The company has attributed whatever wrongdoing occurred
to "isolated instances" of poor judgment at a few psychiatric
hospitals in Texas. - - - - - - he traces the vast majority of
(law)suits to vultures preying on a deep pocketed company in
distress.
----------------------------
- - the case of National Medical Enterprises raises troubling
questions about the temptations for-profit hospitals can face to
place profits above the needs of patients.
-----------------------------
Louis Parisi (New
Jersey fraud investigator) says,
"These people just care about making money."
-----------------------------
James Garcia (health
insurance investigator) contends
that - - - "patients were seen solely as profits".
----------------------------
Former employees of National Medical describe a corporate culture
that prized profits above all else, and not only at the psychiatric
hospitals, - - - . Meanwhile there is some evidence that some of the
company's general hospitals are violating the law by offering perks
and payments to doctors in exchange for patient referrals.
By all accounts, the values and culture at National Medical have always been set by Richard Eamer. An orphan who dropped out of high school and drove trucks before returning to school and getting a law degree. Mr. Eamer was toiling as a health-care tax attorney in the late 1960's when he saw a golden opportunity.
As an orphan Eamer seems to have started life at the bottom end and like Scrushy is a self made man who seized the moment and was then driven by his success.
The
governments launch of the Medicate and Medicaid programs offered
guaranteed profits by spurring demand for health-care services and
promising to pay providers 6% to 8% above their costs. - - - - - With
six Californian hospitals and a $25 million stock offering in 1969,
National Medical was born.
-------------------------
As it grew, Mr. Eamer developed a decentralised structure, with each
hospital reporting financial results separately. He also gave
hospital managers and other executives a great deal of autonomy to
meet financial goals.
--------------------------
The structure freed him from the demands of daily operations, and
former executives say he took full advantage of that freedom, often
using the corporate fleet of planes to disappear, sometimes to
company owned condominiums in London or Aspen, Colo, "You would
sometimes not know where he was for weeks." Says F. Scott Gross, a
former president of the general hospital division, "He didn't
consider it anyone's business." Mr. Eamer says all such trips were
either business-related or paid for by him, and he wasn't gone more
than a week at a time.
Enormous rewards
He paid himself and his
subordinates exceptionally well. In 1991, even as the company’s
fortunes plummeted, Mr. Eamer was the highest paid executive of a
California based company, at $19.9 million
(including stock options)
and five National Medical executives were among the top 30.
-----------------------------
Over the years, Mr. Eamer bought three thoroughbred breeding farms
and two homes near the ocean in star studded Pacific Palisades. He
grew a ponytail and drove flashy cars. At the office he was seen
traversing hallways on a scooter, and occasionally passing time in
senior level meetings clipping his fingernails and playing with his
black retriever. In recent years, Mr. Eamer has spoken openly of
being what he calls "hypomanic depressive," saying the disorder is
fully under control with his use of the drug lithium.
In any case his unpredictability never extended to financial matters. Each month he studied a highly detailed profit-loss analysis for each hospital. Ex-employees say its never been any mystery how he would respond to disappointment. "Dick's philosophy was: I pay well: You produce," says Donald Amaral, a former chief financial hospital for general hospitals.
Dick gives you all the room you want - but he will castrate you if you make any errors," adds John Bowen, a former National Medical executive and consultant for 18 years who left in 1988 and later filed a lawsuit charging that the company hadn't paid what he claimed were millions of dollars in fees due to him. The suit was settled out of court.
Eamer's management style is typical of most of the people who are thrown up as leaders in the health care marketplace. Examine Sun Healthcare's Turner, HealthSouth's Scrushy, or even Columbia/HCA's odd Richard Scott.
Humiliating Subordinates
Two former executives say Mr. Eamer called them "morons" in front of other officials. Another former executive, Mr. Goss, who headed the general hospital division, says, "I can count on one hand the times I have been intimidated in my life. Several digits go to Dick Eamer. There were times he reduced me to emotional rubble." In 1985, for instance, with cutbacks in Medicare and Medicaid payments reduced profits at most general hospitals. Mr. Goss says he told Mr. Eamer to expect 1986 profit growth of 2% to 3%. Mr. Eamer demanded 10% to 12%. "Dick said, 'Don't bring me news that my earnings aren't going to be there,' " Mr. Goss says.
Mr. Eamer denies that he sets unrealistic profit goals or responds abusively if executives don't meet them. "many people (at the company) don’t meet budgets," he says.
With managers offered incentives that could double take-home pay if they met highly ambitious profit goals, all the while receiving little guidance on how to do it, former executives aren't surprised that evidence of wrongdoing emerged. "It was the basic organisational structure and the incentives that created the environment that made the problems in the psychiatric unit possible," says Mr. Goss. It is perhaps also not surprising that the controversy involved the company's psychiatric unit, since the diagnosis of mental and behavioral ills is less precise than that of other medical problems.
The critical role played by incentives is obvious and can be identified in most of the fraud scandals in health care. They are so important for profit and such an essential component of modern management that they have continued unchecked. Only Columbia/HCA claims it has abolished them. In 2002 Tenet were doing exactly the same with the same consequences.
A Shift in Focus
It was in 1986, with earnings sliding at acute-care hospitals, that Mr. Eamer trimmed a third of those hospitals and refocused on psychiatric, substance-abuse and physical rehabilitation hospitals, a field where government and insurance cost-controls were virtually nonexistent. (i.e. no DRG's) A $1 billion expansion, much of it in the company's Psychiatric Institute of America unit was launched.
Creatively finding some way around the restrictions imposed by DRG's has been a prime focus of corporate ingenuity. This is how many did it in the 1980's. In the 1990's the nursing home chains like Sun Healthcare and Horizon built their empires by setting up post acute care services where DRG's did not apply. In 2002 Tenet did it by focusing on "outlier and stop-loss payments".
"We all thought it was quality of care which was keeping the beds filled," says John Hindelong, a health care analyst - - - -"It looked on paper like such an attractive story."
Mr. Eamer says it was quality
care that made the difference. But former hospital managers describe
a corporate strategy to get the most money possible out of each
patient. Robert Stuckey, former longtime medical director - - - -
told the state's insurance department that hospital administrators
ordered him to keep patients hospitalised longer than medically
necessary and ordered unnecessary medical tests, such as a sperm
count on all his male patients, to get more money from insurers.
--------------------------------
One document circulated at National Medical's psychiatric hospitals
spelled out how to write up patient charts to achieve maximum
insurance payments. It is filed as part of a shareholder lawsuit in
state court in Los Angeles. Its first page is a letter written by a
fictitious insurance company. The name: WEECHEETUM.
Aggressive Admissions
In a 1991 Intake manual, sent to all National Medical psychiatric hospitals, administrators outlined the "golden rules." According to a copy obtained by this newspaper. Among them: to hospitalise one of every two people who came in for a "free" psychological assessment. A weekly "insurance remaining report - not medical indications - determined when patients were released says Russel Durrett, former controller of - - - - . It was "common practice" at Twin Lakes hospital to bill adolescents for eight group therapy sessions per day; the number went up to 10 if revenue was sagging. - - - - - . And if profits were too high for one quarter, Mr. Durett testified, he and others were ordered to book "ghost expenses" to hide some of them.
Numerous ex-employees and
lawsuits brought by insurers and others contend that kickbacks and
"bounty hunter fees" of up to $2000 were paid to people ranging from
probation officers and clergymen to officer of corporate employee
assistance programs. Mr. Durett says in an interview that as part of
the 25 weekly "cold calls" he had to make, he even solicited nursery
schools for business.
---------------------------------
William McCabe(from
chemical-dependency unit in Colorado)
- - - asserts (in
court documents)
- - - that in June
1990 Gregory Lachowicz then senior vice president of
(NME's)
Recovery Centre's
division informed him of a new "continued stay" admissions policy. A
patients stay henceforth would be determined "not upon a patient's
individual medical needs, but on the insurance or payor mix
available," the suit alleges.
Insurance Matters
The suit alleges that the policy called for patients whose insurance paid less than 30% of billings to be shown the door within 10 days, but it called for those with at least 60% coverage to stay a minimum of 28 days. After refusing to implement the policies, Mr. McCabe was fired.
In June 1993 I spoke to Mr. McCabe's lawyer by phone. He told me that the case was settled for a substantial sum but McCabe was bound to silence by the agreement.
Cheryl Paul says she saw such practices first hand. In 1990, she voluntarily checked into National Medical's Doctor's Hospital in Dallas for a two-week substance-abuse treatment program. When she asked to leave she was strapped down with leather restraints in a four point, spread eagle position in a "seclusion room" and kept that way for six or seven weeks, all to cash in on her insurance coverage.
Many similar accounts from psychiatric patients were given to the 1991 Texas Senate inquiry by patients and published in the press.
Mr. Eamer and other National Medical officials say that fewer than 1% of psychiatric patients have been dissatisfied, that any wrongdoing at the company was limited to psychiatric facilities, and that any problem at those facilities has been addressed.
In June 1993 I met with Senator Moncrief who conducted the 1991 Texas Inquiry and was given access to the transcripts of the inquiry. This was not what he found.
Investigating
Other Areas
-------------------------------
Twice in two years the company's general hospital division has been
slapped with cease-and-desist orders from the FTC, which charged some
National Medical hospitals with making "false and misleading" claims
in advertisements for patients.
---------------------------------
Four former executives of the general hospital division say in
interviews that National Medical has routinely offered inducements to
doctors for patient referrals, and compensated for them by charging
insurers at a higher rate than their not for profit competition for a
broad range of treatments and services. The executives also say the
company has forgiven big loans to doctors in exchange for patient
referrals. - - - - government officials concede the law is weakly
enforced and such practices are fairly widespread.
------------------------------------
In the 1980s, so many of the rents in the dozens of medical buildings
National Medical operated next to its hospitals were well under
market value or altogether free that the buildings operated at a
loss, says Mr. Amaral, the former chief financial officer - -
-.
At this time there were a number of press reports asking questions about NME's general hospitals. This article was one of them. In June 1993 I spoke to a fraud investigator in Texas and expressed my concerns that similar practices were occurring in general hospitals including international hospitals. She told me that they simply did not have the staff to investigate the general hospitals as their hands were full.It may have been that by 1994 the Justice Department had enough information and had to draw the line somewhere. They were not going to put the company out of business and reached a negotiated agreement which allowed NME to continue operating general hospitals. NME and Tenet subsequently claimed that their general hospitals and international hospitals were clean. The new scandal in 2002 suggests that the way this was handled was a serious mistake.
National Medical's board of directors seems to be standing firmly behind Mr. Eamer. That’s perhaps not surprising; The 17-member board has seven members employed by the company, and, of the 10 outside directors, eight are either former employees or have ties to companies that receive donations or business from National Medical.
One wonders at the standard of corporate governance and whether a situation similar to that in HealthSouth existed. At that time authorities were not as alert or as worldly wise as they were by 2002.
Fighting Back
A frustrated Mr. Eamer,
calling himself the "hardest-working executive in the health care
industry," is determined to restore his company's good name and
strong financial record. He notes that it has one of the strongest
balance sheets in the hospital industry, and he is taking steps to
position the company for the future.
---------------------------------
Our focus is on the patient," he told a packed room of angry
shareholders at last Septembers annual meeting. "We know everything
else will follow."
The problem is that Eamer, like Scrushy, like Turner, like Scott, and like Barbakow very probably did believe exactly what he was saying and that is why this health care marketplace is so scary.Eamer's friend and mentor, Barbakow took over from him in 1993. With the help of their lawyer Sulzbach NME negotiated a settlement. The way in which Barbakow and the largely unchanged board maintained the company's, philosophy, culture and practices over the years is described in other pages. It resulted in an equally dramatic scandal in 2002.
After the scandal in 1991 the three founding directors were forced to resign. While the renamed Tenet Healthcare made much of its change of heart and its commitment to exemplary conduct it made few changes in management. The same old team simply moved up in the hierarchy. Focht remained a key figure. When the second scandal erupted in 2002 this was heavily criticised.
Tenet's senior management team, in addition to Barbakow, 50, and Focht, 52, will consist of Maris Andersons, 58, senior vice president and treasurer; Scott M. Brown, 49, senior vice president and general counsel; Raymond L. Mathiasen, 51, senior vice president and chieffinancial officer; Christi R. Sulzbach, 40, senior vice president, public affairs, and associate general counsel; and Alan R. Ewalt, 50, senior vice president, human resources. All held the same positions with NME.
AUSTRALIAN MEDICAL ENTERPRISES: SECURITY AGREEMENT (Part A) Australian Stock Exchange Company Announcements March 6, 1995Tenet appears to be a corporation that is ethically and morally bankrupt. Until May 2003, eight out of twelve senior management positions were held by holdovers from NME, including Mr. Barbakow, Ms. Sulzbach, Michael Focht, Barry Schochet, Bernice Bratter, Maurice DeWald, Lester Korn, and Raymond Mathiasen. Ms. Bratter, Mr. DeWald, and Mr. Korn were finally ousted in April 2003, when Mr. Barbakow stepped down as Chairman. Finally, in May 2003, Mr. Barbakow resigned as CEO, however, Ms. Sulzbach, Mr. Focht, Mr. Schochet, and Mr. Mathiasen remain at Tenet.
The $54 million settlement, as well as Tenet's failure to acknowledge any liability or wrongdoing, is further evidence, in my opinion, that Tenet views healthcare fraud settlements as the cost of doing business with the federal government, while profiting at the expense of innocent victims and America's taxpayers. It is long past due that Tenet, and its officers, directors and board members, be held accountable for the corporate culture and governance practices that resulted in healthcare settlements totaling over a billion dollars in the past decade.
Letter Senator Grassley to Trevor Fetter (Tenet CEO) re recurrent fraud Sept 5, 2003
Under continuing pressure from Grassley and other Tenet's critics after the second scandal, Sulzbach, Focht, Schochet and Mathiasen eventually resigned
Pullen, 48, who has been with the company in various jobs for 20 years, will replace Raymond L. Mathiasen, who will be retiring but will remain with Tenet as a senior advisor until the transition is complete.
Tenet Taps New Accounting Officer Los Angelis Times June 13, 2003Christi Sulzbach will step down as general counsel and chief corporate officer of Tenet Healthcare Corp., Santa Barbara, Calif., on Nov. 1. In a company news release, Sulzbach said outside pressure was the motivation for her departure. "While we have made progress in recovering from our many challenges, I believe that I have become a focal point for some Tenet critics," Sulzbach said. Chief among those critics is Sen. Charles Grassley (R-Iowa), whose Senate Finance Committee is investigating Tenet. Earlier this month Grassley ripped Sulzbach's compliance oversight and her former dual role as Tenet's general counsel and chief compliance officer.
Outside pressure prompts Tenet counsel to resign Modern Healthcare's Daily Dose Sept. 26, 2003Schochet, 53 years old, joined Tenet's predecessor company, National Medical Enterprises, in 1979. He held several posts, including president and chief operating officer of National Medical's hospital unit.
Tenet Vice Chairman to Resign The New York Times July 28, 2004
It is clear from their statements after the first scandal that the company still saw aggressive market practices and close links with doctors as the key to success. They had no insight and did not think that they had done anything seriously amiss. Read their mission carefully. Whose beliefs are to be shared? The problems which were to explode in 2002 are written into their mission.
Barbakow and Michael H. Focht Sr., president and chief operating officer explained the rationale for the company's new name in a letter hand-delivered this morning to approximately 68,000 employees:"We wanted a name that would convey the idea that a number of values are at the core of our business philosophy," said the letter. "Key among those attributes is our intention to build our business upon a foundation of partnerships: partnerships with employees, with shareholders, with physicians, with other providers, with suppliers, with payors and with the communities we serve.
"Successful partnerships require that the parties share certain beliefs; that they hold philosophies, expectations and standards in common. And that's exactly what the word 'tenet' conveys. Our new name says that we have strong values and beliefs and that we will seek out others with similar views for the benefit of both.
"Among our core beliefs are the importance of integrity, teamwork and innovation. We will put these into practice daily as we provide the full spectrum of quality, cost-efficient services."
------------------------------
"We believe that partnerships and alliances will become the cornerstone of industry-driven healthcare reform," said Focht. "No single hospital will prosper alone. The best healthcare services will be delivered most cost-effectively through local integrated networks, built upon strategic partnerships with other healthcare providers, insurers and employers. We are building such networks in each community we serve, individually designing them to meet that particular community's healthcare needs."
AUSTRALIAN MEDICAL ENTERPRISES LIMITED: RE: NATIONAL MEDICAL ENTERPRISES (Part A) : TENET HEALTHCARE CORP. CREATED AS NATIONAL MEDICAL ENTERPRISES COMPLETES ACQUISITION OF AMERICAN MEDICAL INTERNATIONAL Australian Stock Exchange Company Announcements March 2, 1995"The combination of these two strong companies will create one of this country's preeminent healthcare providers," said Jeffrey C. Barbakow, chairman and chief executive officer. "Tenet has the cash flow and balance sheet necessary to be an aggressive leader in this rapidly evolving industry.
AUSTRALIAN MEDICAL ENTERPRISES: SECURITY AGREEMENT (Part A) Australian Stock Exchange Company Announcements March 6, 1995
When the constraints imposed in 1994 were lifted in 1999, the company rapidly reverted to past practices and a massive scandal erupted in October 2002.
After taking the reins of the corporation, Mr. Barbakow settled myriad allegations against NME, by agreeing to pay more than $600 million in legal settlements, and agreeing to plead guilty to several felony offenses, including charges of kickbacks, bribes, unnecessary medical treatments and false billings, at its psychiatric hospitals in 30 states. In addition, NME agreed to divest itself of its psychiatric facilities and agreed to a mandatory corporate integrity agreement (CIA) that required NME to implement a program designed to insure integrity in its relations with the government and the quality of care it provided. Finally, in 1995, NME changed its name to Tenet Healthcare Corporation after merging with American Medical Holdings, Inc.Unfortunately, a change of names did not change the culture of fraud at the corporation. If anything, Tenet's history of defrauding government healthcare programs reached new heights under Mr. Barbakow. The NME management team that agreed to the record $379 million settlement in 1994, including Mr. Barbakow, Ms. Christi R. Sulzbach, and four out of ten members of the Board, remained largely intact after the name change to Tenet. Ms. Sulzbach, who signed the settlement and CIA with the Department of Justice (DOJ), was promoted and became Tenet's chief corporate officer, general counsel and chief compliance officer. According to the Department of Health and Human Services (HHS), Office of Inspector General (OIG), Tenet did not stay on the straight and narrow and has been the subject of at least 53 federal investigations dating back to the 1994 CIA, including among others, allegations of cost report fraud, upcoding, overbilling, duplicate billing, kickbacks, providing medically unnecessary services, misrepresenting services, falsifying medical records, billing for services not rendered, providing poor quality of care, and for patient abuse. Tenet has paid over $500 million to settle many of these investigations.
Letter Senator Grassley to Trevor Fetter (Tenet CEO) re recurrent fraud Sept 5, 2003
While many senior staff have departed some have been replaced by people who have worked at Tenet for years. Trevor Fettor carries considerable cultural baggage because of his long association with Tenet and his even longer association with his mentor Geoffrey Barbakow. His appointment as CEO was strongly criticised. Given the nature of the market and the ongoing influence of people like this the likelihood of any real change in Tenet's culture seems remote.
And, in a letter yesterday to Tenet's chairman, Grassley questioned the independence of the company's new chief compliance officer, Cheryl Wagonhurst, and condemned the long-time ties of new CEO Trevor Fetter to Tenet and to the company's former chairman and CEO, Jeffrey Barbakow.
Letter Senator Grassley to Trevor Fetter (Tenet CEO) re recurrent fraud Sept 5, 2003
My views about Tenet's culture are echoed by Dr Lee Pearce one of Tenet's strongest critics in the USA. I do not share his view that this can be accomplished within a marketplace framework.
"This remaining triumvirate helped cause the problem and can never be part of the solution," Pearce stated in a recent letter to Tenet's board. "Tenet ... cannot begin to heal until the old NME management team, and its corporate culture have been purged."
Tenet's Mr. Outside Has Inside Game Too The Street.Com (Melissa Davis) September 2, 2003
Barbakow and Sulzbach have kept a low profile and there is not much information about them. The nursing unions were scathing about Barbakow's past activities in the film industry. While the market praised his efforts there, others seem to have found him ruthless and some of his actions worrying. He then went to Merrill Lynch before joining Tenet's board and becoming a close adviser to Eamer. His remuneration was staggering and Tenet's headquarters were kept in Santa Barbara in California purely for his convenience.
The story of the role of Tenet's culture and the involvement of the hard core of NME staff in the second scandal are discussed on the first page of the story of the 2002 scandal.
The history of an administrator in Singapore and Australia is traced through to his role in the 2002 needless heart surgery scandal at Tenet's Redding hospital.
The persistence of a small core of Tenet/NME staff after major changes made in 2006/7 is documented on the second page telling the story of the resolution of the 2002 scandals. Early signs of the same business focus are noted.
Web Page
History
This page created July 2003 by
Michael
Wynne
Updated July 2007
