For health care companies considering the move into home health care, the story of Columbia/HCA Healthcare Corp. serves as a sobering reminder of the pitfalls on the road to profits.
The nation's largest health care company, which has two Los Angeles facilities, is under investigation by the Justice Department for alleged Medicare billing abuses. Three mid-level Columbia executives were indicted earlier this year on charges of falsifying cost reports for reimbursement by Medicare, and federal officials are in the process of investigating more than 200 Columbia hospitals nationwide.
Among other things, investigators are examining whether the Nashville-based company improperly shifted hospital costs not covered by Medicare onto home health operations that are covered, and whether it improperly sent patients to home care services in which the company held an interest.
Columbia/HCA officials initially denied the allegations, but former Chairman and Chief Executive Richard Scott resigned last July and Columbia/HCA put its home health division up for sale in September as part of an effort to resolve the federal probe.
The company's two local facilities are the 236-bed Columbia West Hills Medical Center in West Hills, which has a home health care unit, and the Columbia Las Encinas Hospital, a 138-bed psychiatric care and chemical dependency facility in Pasadena.
Neither facility has been impacted by the probe, according to officials at Columbia/HCA, who also say Justice Department investigators have not examined the company's facilities here.
"(The investigation) has not hurt our business in California," Vonnie Fox, vice president of homecare for Columbia Homecare Pacific Division, said in a statement.
In fact, the patient load handled by the West Hills facility's 55-member home care unit staff has been growing, said Lori Kapper, spokeswoman for the Columbia West Hills Medical Center.
"Many of our part-time employees have been moving to full-time work this year to handle the increased patient load," she said.
Kapper did not have specific figures on this growth.
If home health care business hasn't suffered at West Hills in light of the investigations, it doesn't surprise John Edelston, president of HealthPro Associates Inc. in Woodland Hills.
"The home health care industry is very price-competitive," Edelston said. "A drop in service or different prices might make people move their business, but I'm not sure about the investigation."
Home health care generates about $1.2 billion a year for Columbia.
The company's stock was trading last week at about $28 a share on the New York Stock Exchange, down from its 52-week high of almost $45.
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