What Drove Rick Scott’s Hospitals To Commit Billions In Medicare Fraud?

Rick Scott

Rick Scott

Maggie Mahar — whose book Money-Driven Medicine is a bible for those of us trying to figure out why Rick Scott’s Columbia/HCA paid $1.7 billion in fines to the federal government — has published a new more detailed analysis of what drove the company to acquire so many hospitals and commit such shameless Medicaid fraud during the period Scott was its CEO.

Mahar captures a company who was driven not by a desire to improve patient care or outcomes, but the need to constantly expand and acquire new properties. It focused on the price of its stock rather than the quality of its service and it was this mindset that forced Columbia/HCA to cut corners, price gauge and place the safety and health of its patients at risk:

Their goal was growth, and they believed speed was essential. Sometimes they bought a hospital just to close it down, so that it wouldn’t compete with a nearby Columbia property. Scott cared little about the needs of the communities where he bought. “His arrogance and disdain for the concern for communities, was appalling,” said Paul Torrens, MD, MPH, professor of health services management at the UCLA School of Public Health. […]

In Ohio “Attorney General Betty Montgomery was so outraged by what she characterized as the ‘peremptory, bullying’ tactics that Columbia employed in its failed attempts to acquire Blue Cross/Blue Shield of Ohio and Massillon Community Hospital that she took the company’s Ohio chief aside and delivered a blunt threat,” Business Week reported. “Says Montgomery: I told him that if you want to do business in Ohio, just play it straight from now on. Otherwise, I will fight you in court any time, anywhere.’”

In 1997, when Lawrence Hospital, a community-owned facility in Lawrence, Kan., refused three buyout offers from Columbia, the company took an option on property nearby and sought to build a competing hospital. “‘We like to say here that they approached us in a very aggressive manner to marry them,’ Ray Davis, chairman of the hospital board, told the New York Times. ‘And when we said no, they decided they were going to kill us.’”


Ultimately, Scott epitomized those CEOs of the 1990s (Enron’s Ken Lay, et. al.) who saw their company, not as an organization that produced a product that they could be proud of–but as a stock. Share price was all. Questions about whether the company was delivering value to its customers were moot. This explains why Scott would be happy to slash nursing staff, bribe doctors to “put heads on beds” (whether or not those patients needed to be hospitalized), and lie to Medicare.

All this correlates well with today’s article about one Columbia/HCA acquisition deal gone bad and contrasts sharply with Scott’s strong defense of his tenure, all the while providing a glimpse into some of the so-called “mistakes” that he has ostensibly taken responsibility for. This isn’t just a few accounting errors or regulatory oversights, it’s an entire business mindset that’s based on short term success but and inch deep commitment.