Tenet Healthcare Corp., which once owned nine Orange County hospitals, is paying a heavy price to wrap up a long-running battle over its Medicare billing practices: $725 million.
The hospital operator agreed late last month to pay the money as part of a settlement with federal officials to end investigations into alleged overbilling of Medicare. Tenet also plans to sell about a dozen hospitals,none in OC,in an effort to get its financial ship in order.
Tenet owns five OC hospitals: Fountain Valley Regional Hospital and Medical Center, Los Alamitos Medical Center, Irvine Regional Hospital and Medical Center, Garden Grove Hospital and Medical Center and Placentia-Linda Hospital.
In 2004, the company sold Western Medical Center-Santa Ana, Western Medical Center-Anaheim, Coastal Communities Hospital in Santa Ana and Chapman Medical Center in Orange to Integrated Healthcare Holdings Inc. Costa Mesa-based Integrated Healthcare bought the four hospitals for $70 million.
As for the settlement, the $725 million is nearly a quarter of Tenet’s market value of $3.2 billion at recent check. Tenet said in a release that the money would be paid during the next four years. Probes by the Department of Justice and several U.S. attorneys will end as part of the pact.
Most of Tenet’s penalty is to settle charges that it overbilled Medicare for expensive treatments, made illegal kickbacks to doctors to refer Medicare patients to its hospitals and used improper billing codes to bilk the federal healthcare program for senior and disabled Americans.
Some analysts had expected Tenet to pay as much as $1.5 billion to settle the Medicare issue.
Tenet officials hope that with the settlement news, it can put aside investigations and lawsuits that have both sent its stock price crashing and irritated doctors.
Tenet’s shares, which were trading at more than $50 in late 2002, were $6.85 at recent check.
The company isn’t completely out of the storm. Its deal with federal officials doesn’t end a Securities and Exchange Commission probe into its disclosure of Medicare and managed-care payments.
Even though the deal means there would be no findings that Tenet broke the law, Trevor Fetter, Tenet’s chief executive, said in published reports that the Dallas-based healthcare company “made mistakes” prior to 2003, when Tenet first came under investigation.
“Some of this company’s past actions did not measure up to the high standards we have imposed on ourselves,” Fetter said.
Lasers and Mouthwash
BioLase Technology Inc., an Irvine-based company that’s had some big challenges in recent years, got a boost late last month.
The maker of lasers mainly for dental work inked a pact with Procter & Gamble Co., the Cincinnati consumer products giant.
BioLase said it would license some laser technology to Procter and Gamble. The companies plan to develop certain consumer products, such as toothpaste, mouthwash and whitening strips, with the laser technology.
Procter & Gamble will pay $3 million initially to BioLase, which also will earn quarterly payments of $250,000, plus other performance-based fees. In addition, Procter & Gamble will pay BioLase ongoing royalties based on sales of the products.
Procter & Gamble’s expertise in developing consumer products as well as its track record in brand creation were reasons for the partnership, BioLase Chief Executive Jeffrey Jones said in a release. BioLase’s shares closed up 6.7% when the deal was announced.
BioLase has beaten back several challenges during the past year. It had to revise financial statements primarily due to sales tax issues, took heat after delaying filing financial reports with the Securities and Exchange Commission and staved off a potential delisting of its stock.
But in May, BioLase shares were hammered after Chief Executive Robert E. Grant said he was stepping down and the company missed first-quarter earnings expectations.
Heart Valve Center
Hoag Memorial Hospital Presbyterian in Newport Beach recently opened a heart valve operation that’s dedicated to screening, diagnosis and treatment of valve-related heart disease.
The center is a specialty unit that’s set inside Hoag’s existing Heart and Vascular Institute.
Hoag officials say the new services emphasize a team approach to treating the disease. It is bringing together echocardiographers, professionals who use ultrasound machines to detect heart valve abnormalities, and surgeons.
Hoag says its 3-D echocardiography is able to identify patients who currently have the disease, but aren’t showing symptoms.
Hoag’s center opened at a time when the American College of Cardiology and the American Heart Association issued new guidelines to treat heart valve disease. More focus is supposed to be put on patient preference, rather than age.
In the past, age has played a large part in choosing tissue heart valves rather than mechanical ones.
The revisions are considered the first comprehensive update to practice guidelines in eight years.
More Valves
Speaking of heart valves, Irvine-based CoreValve Inc. said it completed enrollment in a clinical trial involving its ReValving system, which replaces heart valves in a less-invasive manner on a beating heart. CoreValve said 51 patients at seven sites in North America and Europe have undergone percutaneous aortic valve replacement for treating various valve-related problems.
