The following script is from "The Cost of Admission" which aired on Dec. 2, 2012. Steve Kroft is the correspondent. Sam Hornblower, Michael Rey and Oriana Zill, producers.
If you want to know why health care costs so much in this country, consider this, it's estimated that $210 billion a year -- about 10 percent of all health expenditures -- goes towards unnecessary tests and treatments and a big chunk of that comes right out of the pockets of American taxpayers in the form of Medicare and Medicaid payments.
For more than a year, we have been looking into the admission and billing practices of Health Management Associates. It's the fourth largest for-profit hospital chain in the country with revenues of $5.8 billion last year, nearly half of that coming from Medicare and Medicaid programs. We talked to more than 100 current and former employees and we heard a similar story over and over: that HMA relentlessly pressured its doctors to admit more and more patients -- regardless of medical need -- in order to increase revenues.
Health Management Associates owns 70 hospitals in 15 states. It's thrived buying small, struggling hospitals in non-urban areas, turning them into profit centers by filling empty beds. Generally speaking, the more patients a hospital admits, the more money it can make, a business strategy that HMA has aggressively pursued.
Steve Kroft: Did you feel the hospital was putting pressure on doctors to admit people?
Nancy Alford: Yes.
Steve Kroft: For what reason?
Nancy Alford: Money.
Steve Kroft: You're sure of that?
Nancy Alford: Uh-huh (affirm).
Until she was fired, Nancy Alford was director of case management at the HMA hospital in Mesquite, Texas, where she oversaw the auditing of patient records and signed off on the accuracy of bills sent to Medicare and Medicaid. She'd never met former HMA doctors Jeff Hamby, Cliff Cloonan, and Scott Rankin until we brought them together in New York to discuss their experiences at HMA.
Scott Rankin: What's really remarkable is we're from very different areas of the country. Yet, the pressures placed upon the emergency physicians and the mechanism in place to enforce those procedures and policies, exactly the same.
Cliff Cloonan is a retired colonel who spent 21 years as an Army doctor before joining the Carlisle Regional Medical Center in Pennsylvania as the assistant emergency room director. Dr. Scott Rankin worked in the same department. Both say they were told by HMA and its ER staffing contractor, EmCare, that if they didn't start admitting more patients to the hospital, they would lose their jobs.
Cliff Cloonan: My department chief said, we will admit 20 percent of our patients or somebody's going to get fired.
Steve Kroft: What's wrong with admitting 20 percent?
Scott Rankin: In a relatively rural, limited resource community hospital your admission rate out of the emergency department, somewhere in the neighborhood of 10 percent.
Steve Kroft: And they wanted 20?
Scott Rankin: Correct. They wanted 20.