Crime Pays

This happens all the time, though not necessarily on this scale: a for-profit hospital chain is sued by whistleblowers for conspiring to admit patients who did not need to be hospitalized, in order to bill Medicare and Medicaid. (The law allows whistleblowers to sue in cases of Medicare fraud. The Justice Department has joined several of these lawsuits against Health Management Associates.)

This is nothing new. As big, for profit corporations take over more and more of health care we're likely to see ever more of this. But here's the point of this here blog post. First:

[W]hen H.M.A. announced the Justice Department’s involvement in the lawsuits, investors and analysts shrugged, and the stocks for both companies involved in the merger barely budged. Sheryl R. Skolnick, who follows health care for CRT Capital, recently wrote in a note to investors, “Investors seem to think that D.O.J. investigations, qui tam suits and allegations of serious Medicare fraud are simply a cost of doing business.” Many settlements run only into the tens of millions of dollars. That’s a corporate slap on the wrist for companies whose stocks typically soar when executives push the profit envelope. Only if the penalty is at least $500 million, Ms. Skolnick said, are corporations likely to find the cost a deterrent.

Okay, that's nothing new either. Actually this story appears right next to the story about Jamie Dimon getting a $20 million raise. But what the Times story doesn't mention is that admitting people to the hospital is very bad for them. .

Elderly people who are hospitalized often suffer a decline in health. They become disoriented and delirious, lose physical fitness as they lie in bed, and eat poorly. There is a danger of hospital acquired infections. And of course you worry, you lose your freedom, and you may not have the opportunity to do essential chores at home, lose work time -- there's all sorts of danger and damage.

In other words, this is not just a financial crime, its kidnapping and assault and battery. Who knows, it might even have killed people. Oh -- the corporate president who drove the scheme, Gary D. Newsome, was paid $22 million before he quit and went to Uruguay to, err, lead a religious mission. Really. Any chance he will ever be separated from any of that $22 million, or do 20 years to life? What do you think.