A Brief History of Kickback Schemes at Chicago Hospitals

Edgewater Medical Center in Chicago. Photo via Flickr/Zolk

Edgewater Medical Center in Chicago. Photo via Flickr/Zolk

News broke yesterday that six have been arrested in an alleged kickback scheme at Sacred Heart Hospital on Chicago’s West Side. According to the Tribune, the hospital was performing unnecessary procedures on patients in order to increase the money it received from Medicare. The procedures in this case appear to be tracheotomies, which is where an incision is made into the neck and trachea so a person can have an airway other than their mouth or nose. Usually a tube is also inserted to help the breathing occur.

According to the Illinois Department of Public Health, Sacred Heart is a for profit hospital and in 2011 it provided $11,742 of charity care. What’s interesting is in the breakdown of patients and revenue in the annual report it says 38.2 percent of inpatients were Medicare patients but 60.1 percent of inpatient revenue came from Medicare.

Since the raid and arrests happened on Monday, this news story is still unfolding. What’s unfortunate beyond people being heavily medicated and having unnecessary procedures performed on them is if this is all true, this isn’t the first time there has been Medicare fraud committed by a Chicago hospital as part of a kickback scheme.

Edgewater Medical Center is an eyesore that has sat empty for more than a decade due to closing after numerous staff members were found guilty of Medicare fraud. The most detailed explanation I’ve found of the hospital’s closure comes from Ken Fager of American Urbex:

Vice president Roger Ehmen and medical director Dr. Ravi Barnabas were able to turn the nearly bankrupt hospital into a lucrative profit center. The pair tapped Dr. Sheshiqiri Rao Vavilikolanu and Dr. Kumar Kaliana to recruit potential patients. For years the doctors sent hospital employees into the Chicago community to find potential patients. It did not matter if they did not have heart conditions, were drug addicts, were unable to speak English or even had no health insurance coverage. Recruiters instructed the potential patients how to feign symptoms in order to mandate services rendered by Edgewater Medical Center. In return the patients were offered money, food, cigarettes and other amenities for their cooperation.

In addition to this doctors at Edgewater Medical Center performed unnecessary angioplasties, which is a procedure where arteries are widened. People were killed as a result of these procedures. As I said earlier, news broke, people were tried and the hospital closed. A simple look on Flickr for “Edgewater Medical Center” will return numerous photos from inside the hospital, many of which make it appear as if the staff simply up and left the building, forgetting to take the patient records and chemicals with them.

There are numerous questions to be brought up with both of these cases. What would compel these hospitals to do this? It’s possible that they did this simply so they could stay afloat as other hospitals in Chicago have had to close because they couldn’t afford to keep running. (RIP Michael Reese Hospital.) There are also questions that could be brought in about what it is with Medicare’s set-up that makes the use of dangerous procedures seem like a good way to increase hospital revenue. I’ve heard some things from doctors I know about the set-up of Medicare sometimes pushing them to treat more patients, but I don’t know how much of that is true.

I also find it interesting no one criticized Sacred Heart Hospital for how little charity care it provides since it’s on the west side of Chicago. Rush University Medical Center has been criticized for not providing a large amount of charity care–although it’s right next to John H. Stroger Jr. Hospital of Cook County–as has University of Chicago Medical Center on the south side. Again, numbers on charity care aren’t everything and I imagine its status as a for profit hospital came into play with the lack of criticism, but it does strike me as odd no one criticized this hospital.

Let’s hope this story doesn’t become worse as time progresses.

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