Former HCA CEO Rick Scott: Bad News for Florida Healthcare If He Becomes Governor

Last Updated May 4, 2010 6:15 AM EDT

Rick Scott, the controversial former CEO of Columbia/HCA Healthcare who's running for governor of Florida, has promised to create jobs in the Sunshine State the old-fashioned way -- by encouraging the entrepreneurial spirit. But it was that philosophy that got him and Columbia/HCA in trouble back in the 1990s.

And in a state that's already notorious for healthcare fraud and the over-supply of every kind of medical care, one wonders how Scott would regulate the state's healthcare industry -- or implement Obama's reform law -- should he win the gubernatorial race.

For those of you who have forgotten -- or are too young to know -- Scott was the hotshot entrepreneur who in 1987, bought a couple of hospitals with the help of financier Richard Rainwater and, within a decade, took over HCA and built the nation's largest for-profit hospital chain. In 1997, Scott's empire unraveled and he was forced to resign from the company when government investigators charged that Columbia/HCA had defrauded Medicare by inflating cost reports, among other things.

To settle the civil and criminal charges against it, Columbia/HCA paid a total of $1.74 billion in fines. Scott, who was never personally charged, walked away with severance pay of $10 million, a 5-year consulting contract, and stock then valued at $300 million. In 2001, he founded Solantic Corp., which operates a chain of urgent-care centers.

Fast forward to March 2009. Scott founded Conservatives for Patients Rights with $5 million of his own money "to promote free market healthcare reform." The group was one of the most vociferous foes of the Democratic reform legislation. In Scott's current campaign, he appears to be building on his image as an opponent of this supposed "government takeover of healthcare."

Scott has said all along that he's innocent of wrongdoing and that Columbia/HCA would have been proved innocent, too, if it had fought the charges. But the company admitted "systematically overcharging the government by claiming marketing costs as reimbursable, by striking illegal deals with home care agencies, and by filing false data about how hospital space was being used." The company's facilities also increased Medicare billings by exaggerating the seriousness of the illnesses treated in its hospitals, Columbia/HCA admitted, and "granted doctors partnerships in company hospitals as a kickback for the doctors referring patients to HCA."

The latter admission is especially interesting in light of Columbia/HCA's perfectly legal (but ethically questionable) practice of selling shares in its hospitals to physicians. Many of these deals, in fact, occurred right in Florida. Considering the number of hospitals and the saturation of physicians in southern Florida, that arrangement was practically an invitation to hospitalize patients and do procedures on them. Even if all of these admissions and procedures were medically necessary, it could not have been in patients' best interest for doctors to admit them to the hospital in which they had a financial interest, even if there were better hospitals nearby.

So if Rick Scott becomes Florida's next governor, physicians, hospitals, and other providers can probably expect him to relax any regulations that obstruct their pursuit of profits. That may create a few jobs. But patients better beware. As for any cooperation with the feds on healthcare reform, fuggedaboutit.

Image supplied courtesy of Kenneth Hynek at Flickr.
  • Ken Terry

    Ken Terry, a former senior editor at Medical Economics Magazine, is the author of the book Rx For Health Care Reform.

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