How the Quest for Margin Can Torpedo the Mission
Lessons learned from lawsuits vs. HCA Mission Hospital & TeamHealth brought by North Carolina, Buncombe County, and emergency physician whistleblowers.
HCA Mission Hospital, along with TeamHealth (its emergency medicine employer), have been sued by the state of North Carolina, sued by Buncombe County, sued by two of its emergency physicians, and placed in “immediate jeopardy” by the U.S. Centers for Medicare & Medicaid Services. That’s quite a descent for the western North Carolina health system, which was financially stable and delivered consistently high-quality patient care prior to being bought by HCA in 2019 - only five years ago.
What are the lessons for emergency medicine from Mission Hospital’s deterioration in the hands of HCA Healthcare, the nation’s largest for-profit hospital chain?
Bad things happen when hospitals don’t hire enough nurses and staff.
Mission Hospital’s staffing levels decreased drastically soon after the HCA acquisition. Per the National Academy for State Health Policy (NASHP) Hospital Cost Tool, Mission Hospital’s number of direct patient care full-time equivalents (FTEs) per hospital discharge was at or above the national average for large hospitals from 2011 to 2018. By 2020, patient care staffing levels dropped to a third less than the national average for large hospitals. (Note that COVID can not be blamed for decreased staffing levels. Asheville, NC was not more impacted by COVID than the average US city.)
Additional staffing-related statements from the NC vs. HCA Mission lawsuit:
“Per North Carolina regulations, a patient-to-nurse ratio for the intensive care unit at a Level II Trauma Program should be no more than 18 two patients to one nurse. Mission’s intensive care unit, where critically ill patients are treated, often has a patient-to-nurse ratio of three or even four patients to every nurse.”
“It is not just nursing staff that is insufficiently staffed at Mission’s emergency department. HCA has also made cuts to housekeepers, food service providers, and other auxiliary staff in its emergency department. As a result, the department is often unclean and unsterile. Moreover, the nurses—who are already overworked trying to attend to their patients—are left to mop up messes, empty trash bins, and deliver food to patients.”
“HCA knows how to adequately staff its emergency department; it just chooses not to. According to public reports, surveyors from the North Carolina Department of Health and Human Services inspected Mission Hospital’s emergency department last month. While the surveyors were onsite, HCA encouraged nurses to pick up shifts ‘any day that they wanted for any amount of time.’ As soon as surveyors left for the Thanksgiving holiday, however, HCA reduced staffing in the emergency department again.”
“HCA claims that it is forced to treat emergency department patients outside of the actual emergency department itself because all the beds in the emergency department are full. But, for two reasons, that is not true. First, HCA is actively choosing not to staff all of the beds in the emergency department in order to boost profits. It is not the case that all of the beds in Mission’s emergency department are full. Rather, all of the beds that Mission chooses to staff are full. HCA frequently chooses to close a section, or ‘pod,’ of Mission’s emergency department—composed of 12 to 24 beds—entirely. Second, of the remaining emergency department pods, HCA uses at least one pod to board patients awaiting beds on Mission’s patient floors rather than to treat emergency department patients. Generally speaking, close to 100 of the beds on Mission Hospital’s patient floors are closed because they are unstaffed. When HCA chooses to close those beds rather than staff them, it often houses non-emergency patients in the emergency department. This strategy burdens the emergency department, which has fewer beds available for those who present with emergent conditions.”
“Responsibility for this downward spiral rests entirely with HCA. For instance, long wait times at the hospital’s emergency department are not because of an inadequate number of beds, but because of HCA’s profit-focused choices regarding how to staff the beds it has. HCA does not fully staff its emergency department or certain in-patient units at Mission.”
Mission Hospital's understaffing and the resulting ED patient boarding were NOT due to financial challenges.
Prior to the HCA purchase, Mission Health was financially stable. Per Mission Health’s 2017 Annual Report, “The combined members operating margin trend has risen steadily from a negative $16.4 million in FY10 to a projected positive $11.7 million for FY17 – showing improvement of $28.2 million over this time.” The hospital’s revenues and margins were stronger than average for large hospitals in North Carolina prior to the HCA purchase.
Monopolies matter.
Mission Health has a dominant market position in western North Carolina. Per a 2021 lawsuit, HCA holds approximately 90% of the market share for inpatient hospital care in Buncombe County, the most populous area in western North Carolina. “Because insurers and consumers in the region have no choice but to use HCA, HCA has free rein to dictate the prices it charges insurers and consumers while at the same time undermining quality to cut costs,” the lawsuit said.
The lack of regional competition also enables HCA to underpay its staff. From the North Carolina vs. HCA Mission lawsuit: “In addition to failing to adequately staff Mission Hospital, HCA also refuses to offer competitive pay to staff. For example, when faced with a nurse staffing crisis, HCA refused to ‘amend its pay scale for the nursing staff so that the ratios could be brought under control.’”
Inability to deliver high-quality, efficient patient care leads to physician and nursing job dissatisfaction and attrition.
From the NC lawsuit: “Because of the chaos that has enveloped the emergency department, Mission Hospital is rapidly losing emergency department physicians. In this calendar year alone, thirteen full-time emergency department physicians and thirteen advanced care providers (i.e., nurse practitioners) have left employment at Mission.”
“HCA’s refusal to adequately staff Mission Hospital is often cited by physicians as their reason for leaving the hospital.”
Whistleblower emergency physicians accused HCA Mission and TeamHealth of inflating patient bills by inappropriately calling trauma activations and systematically over-ordering tests.
Two emergency physicians - Drs. Scott Ramming and Scott Lalor - each with over twenty years of experience at Mission Hospital, sued HCA Healthcare and TeamHealth in 2022 for defrauding Medicare and Medicaid by fraudulently inflating emergency department patient bills.
HCA and TeamHealth were accused of repeatedly instructing their clinicians to lower the threshold for activating trauma codes and alerts. Such trauma activation fees are for mobilizing the trauma team, usually including surgeons and emergency physicians. Trauma activation fees are added to direct patient care charges.
Trauma activations can be lucrative. A 2023 JAMA article, “Assessment of Trauma Team Activation Fees by US Region and Hospital Ownership” showed that “trauma activation fees varied widely among hospitals in the US.” The JAMA study found that for-profit hospitals like HCA Mission charged an average of $24,551 per trauma activation, which is more than three times greater than non-profit hospital average charges.
Per the Ramming & Lalor lawsuit: “After April 15, 2020, which was the date that Team Health came into the Asheville ED, the number of trauma activations surged. There were substantially higher numbers through the end of 2020, then going to even higher numbers in 2021. And yet, the overall patient mix and patient acuity level did not change during that time in such a manner as would account for the change. As physicians who regularly practiced in the Asheville ED for years before the 2019-20 changeover to HCA/TH, and who continued to practice thereafter, neither Relator witnessed any shift in patient acuity such as would justify the striking change in trauma activations volume.”
The suit detailed emails sent from TeamHealth directing clinicians on the criteria to be used for trauma activations. “These have included, for example, a mandate to use ‘CODE TRAUMA’ based on grossly oversimplified criteria: ‘Anyone over 65 or older with a systolic blood pressure of 110 or less is a CODE TRAUMA; anyone with a GCS less than 13 is a CODE TRAUMA....’ (Lalor Summary § 23 & Ex. 1). In fact, it is not the case that ‘anyone over 65 or older with a systolic blood pressure of 110 or less’ should be a CODE TRAUMA. The criteria are far too crude and overinclusive.”
“In another email dated January 30, 2021, TH repeated the same criteria: ‘Reminder: Systolic B[P] <110 in patients 65 or older is code trauma criteria. This is ev[e]n on one isolated BP.’ ‘Reminder: GCS 13 or less is code trauma criteria. This incluldes if from etoh.’ (Lalor Summary § 26).”
An example case submitted by Dr. Ramming: “MRN 2542355 -- I saw this patient on 4/7[/22] at Highlands ER. The patient had fallen off a ladder 3/24, and was seen on that date as well. I diagnosed a severe L3 vertebral compression fracture with spinal canal compromise; this injury was a result of the fall on 3/24, but was not apparent at the time of the first ER visit. The patient had been quite active and was perfectly able to walk since the time of injury. He had no neurological deficit from his injury. He did need urgent spine surgery consultation and surgery, so I discussed this with the specialist on call at Mission Hospital [Asheville], and they recommended transfer”* for the required care. Since the patient had been ambulatory since his fall, I felt that transfer by his own car was reasonable. The patient agreed, and his wife drove him to Asheville. When he arrived to the ER he was given a trauma alert designation, maybe because he had a spine fracture? In any case, it was completely unnecessary, as even a casual layperson could probably detect, since he had no neurological deficit, and since he was ambulatory for 2 weeks....”
Drs. Ramming and Lalor also accuse TeamHealth and HCA of abusing the provider in triage process to overorder unnecessary tests. For example: “‘Code sepsis’ ordered for a non-septic patient. Dr. Ramming will state that it is very common for the Triage Advanced Practitioners to overcall “code sepsis cases.” HCA/TH benefit from this practice in two ways: financial from increased billing/charges, and also because if many ‘non-septic’ patients are pooled with truly sick populations, the overall mortality rate will be lower.”
The physicians conclude: “The changes imposed since HCA/TH arrived have forced physicians, midlevels and nurses alike into adopting a conveyer-belt, fast-food approach to emergency medicine, which is counterproductive both for their experience as employees, and for the experience of the patients.”
TeamHealth is accused of circumventing Corporate Practice of Medicine laws.
The Ramming & Lalor suit explains, “Team Health itself is owned by a large private equity firm, Blackstone, which acquired the enterprise in 2017 for $6.1 billion. Team Health among other things provides ED staffing and administrative services to hospitals through a network of subsidiaries, affiliates, and nominally independent entities and contractors, which operate in nearly all states and which TH refers to collectively as the ‘Team Health System.’ Team Health designed the complex structure of its system to circumvent state laws that prohibit general business corporations from practicing medicine, employing doctors, controlling doctors’ medical decisions, or splitting professional fees with doctors, aka, the corporate practice of medicine.”
Per the North Carolina Board of Medicine, “businesses practicing medicine in North Carolina must be owned in their entirety by persons holding active North Carolina licenses. The owners of a business engaged in the practice of medicine must be licensees of this Board or one of the combinations permitted in N.C. Gen. Stat. § 55B-14. Licensees of the Board providing medical services on behalf of businesses engaged in the corporate practice of medicine may be subject to disciplinary action by the Board.”
Prior to HCA’s 2019 acquisition of Mission Hospital, the Mission emergency department was staffed by Carolina Mountain Emergency Medicine (CMEM), a physician-owned partnership. Soon after HCA’s arrival, CMEM was sold to TeamHealth.
Buncombe County is sueing TeamHealth for inflating emergency department bills.
In 2022, Buncombe County - home to HCA Mission Hospital - sued TeamHealth, alleging that TeamHealth intentionally overcharged the Buncombe County Government Group Health Plan for emergency department medical services.
From the suit: “Buncombe County alleges that the lop-sided distribution of claims with higher-level CPT codes and the expert's opinion are indicative of an ongoing fraudulent over-billing scheme the TeamHealth organization has been engaged in since at least 2017.”
HCA’s management of Mission Hospital has demoralized many of the hospital’s caregivers.
From the article, “Nurses unite in protest against HCA's handling of Mission Hospital staffing issues”: “I never expected it to be as bad as it is," said Lori Hedrick, a nurse. "When we heard that HCA was buying us out, we thought we’ve never been run by a for-profit corporation before, but surely their goal is the same as ours, to take good care of the patients. And it’s absolutely heartbreaking for us every single day to learn that’s absolutely not the case. I’ve heard so many nurses say to me, 'When I finish my shift today, I sat in my car and cried because I tried, I did the absolute best that I could do to take care of my patients and I knew I did not do a good job."
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Many physician leaders have been taught the mantra, “no margin, no mission.” The deterioration of HCA Mission Hospital shows that an excessive pursuit of profits can torpedo a health system’s mission of delivering high quality, efficient patient care.
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PS: HCA Healthcare is doing well financially.
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Thanks for sharing the Hospitalogy newsletter! I really appreciate this perspective from the clinical side of things. Definitely a dynamic to note in future analysis of HCA.
Excellent article!