Consumer Group Calls for Independent Oversight in Response to Tenet Announcement of Hospital Sales

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The Foundation for Taxpayer and Consumer Rights (FTCR) called for independent oversight of the hospital system today in response to Tenet Healthcare’s announcement that it will sell 19 of its 36 California hospitals. The for-profit, publicly traded Tenet, plagued with scandal, FBI investigations of unnecessary surgeries, and allegations of fraud blamed the decision to sell on a $1.6 billion bill to make the 19 hospitals earthquake safe as required under state law. FTCR said that Tenet’s “fair weather friend” mentality should usher in a new era of independent oversight of hospital finances.

For the last 2 years, FTCR has conducted town halls across the state with consumers, hospital executives, and business owners to forge a consensus on a cost effective universal health care system. Providing a standardize set of rates for hospitals and system wide planning was a common theme. To watch videos and read transcripts of statewide town halls visit:

“After years of gaming the system to increase profits, Tenet plans to cut and run as soon as the bill come dues. Allowing hospitals to loot and leave is not the way to run an effective health care system,” said Jerry Flanagan of FTCR. “In town halls across the state, patients and hospital executives agreed that the health care system needs independent oversight of rates to ensure that hospitals serve the patients that need them, not just Wall Street analysts and stock holders.”

Over the last several years Tenet has bought up hospitals to create local monopolies and has gamed the system to reap huge financial reward by charging rates far above what the market could bear. Tenet has also paid millions of dollars to settle allegations that it conducted unnecessary surgeries in order to increase government reimbursements. FTCR said that independent oversight of hospitals and their rates would provide incentives for system-wide planning and quality of service rather than for the number of patients treated or the number of surgeries performed.

FTCR called on Governor Schwarzenegger and the state legislature to create a commission charged with independent oversight of hospitals similar to the one in place in Maryland since 1971. In Maryland an oversight commission sets the rates that hospitals can charge for services and ensures that high quality and efficient providers receive adequate funding for facility upgrades, staffing, and profit. As a result, the average cost per admission has declined from 25% above the national average to 8% below the national average and at-risk urban hospitals are protected from insolvency.

In a letter sent in December to Senate Pro Tem John Burton, signed by California patients and small business owners, FTCR called for standardized rate setting for hospitals. To read that letter visit:

Recent scandals associated to Tenet’s system-gaming and rate-gouging include:

** In August of 2003, Tenet Healthcare agreed to pay $54 million to resolve government accusations that doctors at a hospital in Northern California conducted unnecessary heart procedures and operations on hundreds of patients. In some cases patients were told that they would die without emergency surgery.

** In February 2003, Tenet HealthCare paid $4.3 million to settle allegations that five of its Florida hospitals submitted fraudulent claims to Medicare.

** In January 2003, the U.S. Justice Department filed suit against Tenet Healthcare for allegedly submitting fraudulent claims to Medicare. The case, filed in Los Angeles, alleges that Tenet and its hospitals violated the False Claims Act by manipulating the Medicare coding process to enhance its revenues.

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The Foundation for Taxpayer and Consumer Rights is a non-profit and non-partisan consumer advocacy group. For more information visit our universal health care website at

Consumer Watchdog
Consumer Watchdog
Providing an effective voice for American consumers in an era when special interests dominate public discourse, government and politics. Non-partisan.

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