The Truth About Rick Scott

“He’s as honest as a Boy Scout.”

[Source: The Real Rick Scott, Gulf Coast Business Review, October 15, 2010]

Rick Scott is campaigning to hold Florida’s government accountable to the taxpayers.  He believes in accountability and holds himself to the same standards he expects of others. Predictably, Obama liberal Alex Sink is now attacking Rick Scott .  This site has been established by the Rick Scott for Governor campaign to answer those attacks.

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Q: Is it true that Rick Scott was guilty and paid $1.7 billion for Medicare fraud?

A: No. Rick was never fined, and never charged with doing anything wrong – he was never even questioned as part of the investigation. And he played no part in Columbia/HCA’s decision to settle claims with the government.

Still, Rick Scott believes in accountability.  He acknowledges that mistakes were made at Columbia/HCA during the time he was CEO and he accepts responsibility for that.  He has said on the campaign trail that he should have hired more auditors who focused on compliance with the government regulations.

“I was the CEO of the company and as CEO I accept responsibility for what happened on my watch. I learned very hard lessons from what happened and those lessons have helped me become a better businessman and leader.”

Q. So what really happened?

Rick Scott started Columbia Hospital Corporation and became CEO of that company in 1988, with just two hospitals. Just six years later, Columbia Hospital Corporation merged with HCA, Inc. to become the largest health care company in the world, eventually employing more than 285,000 people in 37 states and generating $20 billion in revenues.

Roughly a year after merging with HCA, the federal government launched an investigation of Columbia/HCA as part of a hard-line approach to control the escalating costs of Medicare.

At that same time, many other health care companies found themselves at odds with the federal government over how to interpret Medicare regulations, and faced a tough choice when the government began sending out demand letters asserting that companies had committed fraud and asking for a quick settlement to resolve the issue.  Some companies settled their cases immediately to avoid additional legal fees and compounded fines.

Rick and Columbia/HCA parted ways in mid-1997 over the issue of how to move the company forward in the face of the federal government’s investigation of Columbia/HCA.

Almost four years after Rick and the company parted ways, Columbia/HCA, like many other companies,  ultimately reached a settlement with the government. According to press reports, the company agreed to pay $840 million in fines in early 2000. Then in 2003, another settlement was reached that settled all further claims for $881 million. All told, the fines and restitution totaled just over $1.7 billion.

Rick Scott has made it clear that as CEO, he accepts responsibility for the mistakes that were made on his watch.

Q: Some people try to imply that Rick Scott was guilty of some crime.  Is that true?

A: No.  These are the same false attacks used by the Obama White House during the health care debate.

Rick Scott was obviously never charged with doing anything wrong and he was never even questioned.

When he parted ways with the company, the Columbia/HCA board of directors voted to give Rick a severance package and a 10-year consulting contract.

Q: Was Rick fired for fraud?

A:  No. Rick was CEO of Columbia/HCA until 1997, when he and the company parted ways  over how to move Columbia/HCA forward in light of the government’s investigation into Medicare compliance.

When he parted ways with the company, the Columbia/HCA board of directors voted to give Rick a severance package and a 10-year consulting contract.

The investigation continued for almost four years after Rick’s departure, when the company reached the first of two settlement agreements with the government.  Rick played no part in the decision to settle any of the complaints.  Columbia/HCA agreed to pay fines in 2000 and later in 2003.

Q: But didn’t the government single out Columbia/HCA?

A:  No.  In 1995, the Clinton Administration announced a “crackdown” on Medicare billing practices across the health care industry (source: Philadelphia Inquirer, May 4, 1995).  The number of Medicare investigations increased from around 600 in 1992 to more than 2,200 investigations by 1996.  At the time, there were tens of thousands of pages of Medicare regulations, and virtually all health care companies were affected by the government crackdown.

By 1998, the government “crackdown” was becoming controversial.  The health care industry started pushing back, complaining that the Federal government was classifying many honest mistakes as “fraud,” and playing a game of “Gotcha!”

Eventually, the government was forced to launch a program to help train hospital billing personnel in how to properly interpret Medicare billing regulations (Source: Hospitals get advice on fraud prevention, USA Today, February 12, 1998).

Q:  Was Rick’s company, Columbia/HCA, the only one to pay fines?
A:  No, it wasn’t.  Thousands of companies paid fines – virtually the entire industry was affected.  And many well-known hospitals got hit with multi-million dollar fines. Among those hit the hardest: Harvard University Hospitals, University of Chicago Hospital,Yale Hospital, Duke University Hospital,  and the prestigious Johns Hopkins university hospital, just to name a few.

Q:  Is it true that Columbia/HCA had to pay the largest fine in history?
A:  Columbia/HCA ended up paying the largest fine in the health care industry at the time. But Columbia/HCA was also the largest health care company in the world at the time.

Q:  In a nutshell, what were the fines for?
A:  News reports say that Columbia/HCA settled the claims which enabled the company to put the matter to rest and avoid expensive legal fees.  According to news accounts, the the settlement covered a broad range of federal regulation compliance problems. (Source: HCA, largest for-profit U.S. hospital chain, to pay government $631 million settlement, Associated Press, December 18, 2002).

Q: How far back did these Medicare compliance problems go?

A:  According to news accounts, the settlement paid by Columbia/HCA included compliance problems at some hospitals at least as far back as 1987, years before those hospitals became part of Rick Scott’s Columbia/HCA network (Source: Roots of trouble run deep, Modern Healthcare Magazine, March 19, 2001).

Rick became CEO of Columbia Hospital Corporation in 1988, after he and another investor bought two hospitals, and over the next several years, bought hundreds of other hospitals and health care companies, and in 1994, Columbia acquired HCA and its 96 hospitals, making it the largest health care company in the world.

Still, Rick holds himself accountable for the problems that occurred during his time as CEO.  He says he learned “hard lessons” from what happened and has vowed to apply those lessons as governor by holding government accountable to the people.

Q: Is it true that two Columbia/HCA managers were convicted of fraud?
A: Actually, government prosecutors failed to prove that what the managers did was intentional.  The 11^th U.S. Circuit Court of Appeals ruled that the federal government’s vast number of Medicare regulations were too vague and “reasonable people could disagree over how to interpret them.” (Source: Court clears ex-HCA executives, St. Petersburg Times, March 26, 2002).

Q: Rick says he will turn Florida around, but what did he accomplish as CEO of Columbia/HCA?

A: Rick Scott demanded accountability and got results.  Let’s look at what Rick Scott accomplished from 1988 to 1997:

• A decade of success – Columbia was incredibly successful in a very short period of time.  The company started with just two hospitals and rapidly grew to more than 340 hospitals in under 10 years, with 285,000 employees in 37 states and generating more than $20 billion in annual revenue.
• High patient satisfaction – Columbia consistently outperformed the rest of the hospital industry in patient satisfaction.  The Gallup Organization found that 94% of patients at Columbia were satisfied or very satisfied, compared with just 88% for the rest of the industry (Source: “Investing in 21st Century Hospitals” – Health Affairs Magazine, March/April 1997)
• “Gold Star” professional standards – Columbia dominated in objective measurements of quality, such as the “Accreditation with Commendation” standard by a remarkable 36%, compared to fewer than 10% of hospitals for the rest of the industry. (Source: “King Kong of Hospital Industry Stays on Top,” CNN/Money Magazine, April 1997).

“A remarkable 36% of Columbia’s hospitals have received “accreditation with commendation” from the government-sponsored Joint Commission on Accreditation of Healthcare Organizations — versus fewer than 10% of all non-Columbia hospitals.”

Source: CNN/Money Magazine, April 1997 Issue

• Fixing what doesn’t work – Under Rick Scott’s guidance, previously struggling hospitals dramatically improved once they were part of Columbia.  Nursing Economics Magazine said, “When these other institutions became affiliated with you, they started to perform better.”  (Source: An Interview with Rick Scott, Nursing Economics Magazine, March 1, 1996).
• Lowering costs – An independent analysis by Yale University found that after lowering costs for patients, quality did not suffer at the top 100 hospitals: “There was no evidence that quality was sacrificed for increased financial efficiency among the top 100 hospitals.” (Source: Performance of the Top 100 Hospitals: What does the report card report? Health Affairs Magazine, July/August 1999) .
• Also, the Center for Healthcare Industry Performance Studies (CHIPS) calculated that the Average Net Price per Discharge shows Columbia/HCA was able to treat patients for the lowest cost:

Average Net Price Per Patient Discharge in 1995:

(Healthcare Forum Journal, September/October 1997)

• Reducing waste and inefficiency – In 1996, Time Magazine named Rick one of the 25 Most Influential People in America for showing that free market health care could significantly reduce waste and inefficiency (Source: Time’s 25 Most Influential Americans, Time Magazine, June 17, 1996).

“In an industry notorious for waste and inefficiency, Scott aggressively consolidates operations and imposes cost controls.”

Source: Time Magazine’s “25 Most Influential People of 1995″

• Changing the industry for the better – Columbia/HCA’s free market approach to health care started to show significant effects on reforming the entire health care system.  Health care inflation virtually disappeared from the industry at Columbia’s peak between 1993 and 1997.  Beginning in 1987, when Rick started Columbia with a focus on quality and cost control, it went from a staggering 18% down to just 0.2% in Rick’s last year as CEO.