Here’s my editorial in today’s issue of FH.
This week saw more controversy regarding some of the bad boys of healthcare past
and strong hints that some of the healthcare market stars of the present may
have adopted their bad habits. Criminal investigations into United HealthGroup
and ACS are now following The Wall Street Journal story about their
stock option pricing and Bill McGuire’s huge fortune. Now Caremark has been
subpoenaed, too. Those of you with very long memories may remember Caremark in a
previous life getting into legal trouble as a home infusion operation in the
1980s and being a financial disaster as a physician group roll-up in the
Meanwhile, Tenet accepts a death penalty on one hospital and is still
struggling to get out from the malfeasance and its appalling, if not outright
criminal behavior, in Redding, CA, and probably elsewhere. Not that this is the
first time that appalling criminal behavior has been seen from that company,
although it was called NME back when it was kidnapping children into its
We won’t do more than mention the name HealthSouth. While they’ve been off
the news lately, it’s worth remembering that the other big hospital chain, HCA,
has paid two of the biggest fines ever for defrauding Medicare, and that the
Senate majority leader’s brother, who happened to be the chairman, had an SEC
investigation mysteriously end in 2002.
So it’s worth asking the question again. Is it just a few bad apples? Or is
the pressure for stock growth from Wall Street incompatible with running a
responsible healthcare company?