In his victory speech last night, Rick Scott, the 57 year old former health care executive and founder of the health care attack group Conservatives For Patients Rights, assured Republicans that the “party will come together” after a particularly bruising primary challenge against Florida Attorney General Bill McCollum. Scott entered the race in April and proceeded to spend approximately $50 million of his estimated $218 million fortune on a negative campaign that sought to deflect attention from his past business controversies and smear McCollum as a product of the establishment.
That outlandish sum, however, is not nearly as shocking as how Scott came to acquire it — as the chief executive of one of the largest and most controversial for-profit hospital chains in the country, Columbia/HCA.
In 1987, Scott, a mergers and acquisitions lawyer who “had cut his teen on deals involving radio stations, fast food businesses, and oil and gas companies before focusing in on the money to be made by acquiring hospitals,” didn’t enter the health care business for the sake of improving the quality of care, but rather wanted to “do for hospitals…what McDonald’s has done in the food business” and “what Wal-Mart has done in the retailing business.” The goal, as Maggie Mahar explains in Money Driven Medicine, “was to combine volume with low cost.” This quote is demonstrative: “Do we have an obligation to provide health care for everybody? Where do we draw the line? Is any fast-food restaurant obligated to feed everyone who shows up?” he asked.
Indeed, through an aggressive strategy of rapid acquisitions and consolidation, Scott turned Columbia/HCA into one of the largest health care companies in the world. Forbes magazine noted Scott ruthlessly bought “hospitals by the bucketful and promised to squeeze blood from each one.” HCA/Columbia executives saw health care as any other commodity. “This industry’s not any different than an airline industry or a ball bearing industry,” said David T. Vandewater, Columbia’s chief operating officer. “You run at 40 percent of capacity or at 60 percent of capacity you’re not getting the maximum value out of your assets.”
Under Scott’s leadership, Columbia/HCA pled guilty to an massive array of fraud charges — which resulted in a fraud settlement of $1.7 billion dollars, the largest in U.S history. Columbia/HCA systematically defrauded taxpayers, charging Medicare $15,000 for Tiffany pitchers and other luxury goods, “exaggerating the seriousness of the illnesses they were treating,” and engineering a program where doctors were granted partnerships in hospitals as a kickback for referring patients. In 1997, “disaster struck in the form of an FBI raid.” In July of that year, “federal agents swarmed Columbia/HCA hospitlas and offices in five states. Within weeks, three executives were indicted on charges of Medicare fraud, and the board had ousted Scott.” Scott left in disgrace, but not before walking away with “a $9.88 million severance package, along with 10 million shares of stock worth up to $300 million at the time.”
During Scott’s tenure at Columbia/HCA, his cost cutting methods threatened patient care and safety:
— Susan Marks, a technician at one of Scott’s hospitals, was forced to monitor 72 heart monitors by herself. Marks explained, “I have to. I’ve been told you either do it, or there’s the door.” [ABC News, 9/26/97]
— Scott downsized nursing staffs, created conditions where “babies were attended as infrequently as every three hours. Once, the only nurse caring for seven ill infants was so busy she failed to hear an alarm when a baby stopped breathing. A parent dashed to the baby and stimulated breathing, the state report said.” [New York Times, 5/11/97] — Hospital workers in Florida complained, “gloves come in only one size, and rip easily.” In addition, California employees protested “filthy conditions,” and being “stretched to the limit” as Scott’s company slashed “the ratio of nurses to patients.” [Money Driven Medicine, pg. 119]
In 2001, Scott would return to health care and the “McDonalds model,” with a chain of urgent care clinics all over Florida. And as Tristam Korten explained in this two part series for Salon, it quickly replicated many of Columbia/HCA’s favorite business practices.
Crosso-posted at the Wonk Room.