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Nov 04, 2002

CONTACT: Jerry Flanagan, (415) 633-1320

FBI Investigating Unnecessary Surgeries; Raids Redding Medical Center

The Federal Bureau of Investigation is investigating allegations of unnecessary medical procedures performed by a physician-led medical group at the Redding Medical Center. The medical center is owned by one of the nation's largest for-profit hospital systems, Tenet Healthcare. In response, the Foundation for Taxpayer and Consumer Rights (FTCR) called upon policy makers to put in place new laws providing comprehensive oversight of state medical groups, called HMO-itos. While there is limited regulation of HMOs and individual physicians in California, no state agency oversees medical groups.

"This scandal is a result of a lack regulations governing physician groups," said Jerry Flanagan, Health Care Advocate for the Foundation for Taxpayer and Consumer Rights. "It took the FBI raiding a doctor's office to uncover this fraud because there is no state agency designated to watchdog medical groups."

The on-going investigation has uncovered patient complaints of unnecessary procedures performed at the northern California medical center. In some cases patients were told that they would die without emergency surgery. Many patients may have opted not to get a second opinion because of what they believed was an immediate health threat. According to the F.B.I, 25 to 50 percent of the procedures performed by two of the medical group doctors might not have been necessary. An affidavit released on Friday said that the director of cardiology at the medical center, Dr. Moon, performed as many as 5 times more catheter procedures than other area doctors. In some cases, the alleged unnecessary treatments led to further health complications for the patients.

"Medical groups must compete for a shrinking health care dollar. As a result, they are inevitably put under pressure to perform revenue-generating treatments. Clearly, independent oversight of treatment decisions and payment practices are necessary to protect patient health from profit-driven treatment decisions," concluded Flanagan.

Designed to give doctors better negotiating power with HMOs, physician-organized medical groups are recent arrivals in California's health care marketplace. The growing crisis among medical groups has resulted from the existing payment practice where HMOs, and other health plans, establishes set rates, called "capitation," for services provided by physicians. Physicians argue that captivated rates are often set too low to cover administrative and treatment costs. As a result, the medical group or physician management firm - dubbed "HMO-itos" by industry insiders - are put under increasing financial pressure to attract revenue generating treatments like heart surgeries. According to a recent report by the California Medical Association, between 1996 and 1999, 113 medical groups in California closed or filed for bankruptcy.

"Lack of medical group regulation is a symptom of an out-of-control health care system," said Jerry Flanagan of the Foundation for Taxpayer and Consumer Rights. "HMOs compete with other HMOs, medical groups vie for a share of the health care dollar, and inevitably, patients lose."

Health policy analysts have criticized the Medical Board of California because it has failed to provide adequate oversight of medical groups to ensure that procedures are prescribed only when medically necessary. Consumer advocates have begun to detect what appears to be a growing trend in medical group wrongdoing across the state.