This is a place for crazy people
last revised on february 23, 2010
The psychiatric hospital business has been a cash cow for many financiers in the last twenty years or so. Several entrepreneurs brilliantly put together empires from one or two hospitals growing by offering stock incentives to doctors. As the profits went up due to doctor participation and attention to the bottom line as well as their patient care, cash flow boomed.
Unfortunately, psychiatric care is based upon deception, misinformation, and milking the insurance system for all it will allow. Apparently one can add to this, gaming of the federal Medicare system for all it will shell out.
It is time for the psychiatric community to own up to some of its errors and to pay for some of its mistakes which destroyed patients' lives and the lives of their families. The other shoe has not yet fallen and many more lawsuits face errant therapists, psychiatrists, and hospitals in the play for pay profession called the mental health industry.
Columbia/HCA is a partnership of financier Richard Rainwater of Ft. Worth and lawyer
Richard Scott. Scott was recently terminated by Darla Moore, the wife of Richard
Rainwater, according to Fortune Magazine.
The new CEO in place of Richard Scott is Thomas Frist, the former head of Hospital Corporation of America. Things are getting so bad that Columbia is considering a name change.
Rainwater also owns a large stake in Magellan Health Care which controls Charter Medical. Magellan, run by Darla Moore, is the largest network of psychiatric hospitals in the country. They are becoming more and more involved in obtaining government money for services formerly not covered as health care.
I personally called Rainwater's office in 1995 to warn them of the potential legal liabilities in psychiatric hospitals due to the recovered memory fiasco and other deceptions which had not yet run their course. I thought he might like to know that mental health experts were not being truthful in their dealings with patients and that a huge deception had destroyed many patients' lives.
I did not get to speak to Rainwater himself, but was assured by his person in charge of the psychiatric centers that they had considered such liabilities before making their investment. He asked me if I thought they should sell their psychiatric hospitals, and I replied I would not tell them what they should do , but that they should inform themselves about this huge potential liability for patient lawsuits and government intervention, even criminal action. They ignored my warning so now they are reaping the consequences.
In Rainwater's own words see his thinking on the future of the psychiatric hospital industry: {from Worth Online--© 1997 Capital Publishing Limited Partnership}
"In January 1996, my firm negotiated a transaction with Magellan Health Services, the leading psychiatric health-care company. The psychiatric industry has, for many years, been very out of favor because of shrinking reimbursements and significant bad publicity.
However, from my perspective, the industry appeared to reach a nadir by early last year. The bad trends -- reflected in statistics such as average length of stay for a patient and new admissions -- seemed to bottom out.
In our opinion, the public valuation of Magellan did not reflect the worth of the many opportunities that are available to a dominant industry player in an incredibly large market."
Columbia attempted to merge with Tenet Healthcare just as the bottom dropped out. The chairman of Tenet also resigned unexpectedly. Tenet is the successor to National Medical Enterprises. This company had gotten into the psychiatric hospital business in a big way and got stung in investigations in Texas of malpractice by state legislators. Its chairman at the time pled guilty to fraud and got a suspended sentence. The corporation also pled guilty and was fined $370 million.
They closed some of their newer facilities in the Ft. Worth area. One of the casualties of all this empire building in the hospital industry seems to be shuttered hospitals and less patient beds while increasing patient costs at the remaining care centers. It seems such a waste.
Two of these facilities involved in the psychiatric scandal were Psychiatric Institute and Bedford Meadows.
One fugitive psychiatrist who fled the country to escape prosecution in July, 1996 is still undergoing extradition hearings in London, England. Dr. Robert H. Gross is wanted in Texas on federal fraud charges. He was captured in May after ten months on the run. Gross is charged with nine felony counts. He is accused of accepting more than $860,000 in kickbacks for patient referrals. A practice not all that uncommon in psychiatric circles where filled beds are crucial and the insurance companies are flush with cash for mythical illnesses.
The partnership between Scott and Rainwater had put these properties into the hands of Columbia/HCA and with the attempted merger, the intent was to apparently put these back into the hands of Tenet. The deal did not go through in time to stave off multiple subpoenas from federal investigators to Columbia concerning allegations of Medicare fraud.
The investigations of Columbia/HCA's apparent gaming of the Medicare system continue on a huge scale. Columbia/HCA announced it is weighing a proposal to spin off up to one-third of its 340 hospitals into a second company. Most of these properties being considered for spin-off were acquired three years ago with the acquisition of HealthTrust Inc.
Several doctors working at C/H have expressed concern about the strong emphasis upon profit at this giant hospital holding company. Apparently, there are stock incentives and financial pressure on doctors to both hold down patient costs and to manufacture charges to the federal Medicare system. It has been reported that C/H charges the government 25% more than the normal charges on a consistent basis.
Columbia is also considering spin-off of its lucrative surgery centers, rehabilitation facilities, and diagnostic centers estimated to have a value of $ 1 billion.
While under a massive federal investigation for fraud, Columbia profits have declined drastically and ambitious plans for growth have been tabled for the time being.
Thomas F. Frist, Jr. is CEO, Jack Bovender is President, and Victor Campbell is Senior VP. Their plans are to cut C/H down to a more manageable size. Along with restructuring plans, the company may be reorganized due to the potential breakup of the company. A late report says that Columbia has agreed to sell at least 100 of its hospitals to an undisclosed buyer.
The possibility of fines and criminal proceedings loom over Columbia and its former executives. It is interesting that Richard Rainwater is barely mentioned in news stories about Columbia/HCA even though he was the one who formed the company and gave the company its marching orders.,
In November, it was reported that Richard Scott, Rainwater's former partner, has bought into America's Health Network, an Orlando based cable channel. Scott's partner on the deal is his former second banana at Columbia, David Vandewater. The cable channel company is struggling and has laid off most of its workforce after a failed deal with Columbia killed by the scandal and federal investigation.
Columbia under Richard Scott had agreed to purchase the majority of AHN earlier but after Scott was ousted, management killed the AHN deal. Scott sees this small company as the nucleus of a possible empire of cable channels similar to his building of Columbia/HCA from two El Paso hospitals making it a $20 billion masterpiece.
Webster F. Golinkin is Chairman and CEO of AHN. Their plan is to form a global health information business. This is the first time Richard Scott has surfaced publicly in the health care arena since he was ousted on July 25, 1997 by Darla Moore, in the middle of the massive federal investigation of possible health care fraud.
No charges have been filed at this time against anyone connected with any of the companies.
Richard Rainwater is a financial genius who guided the Bass Brothers of Ft. Worth into expanding their inherited fortunes before going out on his own. As Bass financial advisor he put them into Disney and holds a large block of stock himself in this company which has grown tremendously until the recent Baptist boycott.
Rainwater has been putting money into real estate and into oil and gas exploration companies. He formed Ensco by putting together Blocker Drilling and Penrod, making the combined company one of the world's largest contract drillers.
Rainwater's Crescent Properties has been buying up Dallas and Ft. Worth real estate at a fast clip and is now entering the Houston market. He is the largest landlord in Dallas already. Rainwater now owns a piece of the Texas Rangers baseball team. He recently purchased Don Carter's interest in the Dallas Mavericks Basketball Team, becoming a partner with Ross Perot, Jr.
Tom Hicks, owner of Dr. Pepper and the Dallas Hockey franchise, has just purchased the Texas Rangers from its 35 or so owners including governor George Bush, et al, for a quarter of a billion dollars. This gives the governor at least $10 million in return on his investment of $600,000. Hicks also paid billions for tv rights to Rangers games and the lease to the new ball park in Arlington.
Hicks and Ross Perot, Jr. have billions at their disposal but just pressured taxpayers to finance a new sports stadium in Dallas for the Perot's Mavericks team and Hicks' hockey franchise.
Today's financiers know how to tap the public money spigot. They back political candidates with their dollars. Then when they want the public to pay for something to make the financiers big bucks, they get their politician on a string to say "if you don't vote to pay for it the city will lose tax dollars when it goes to another city."
The public mostly falls for that argument up even though it's a deception. Dallas just voted to build a new sports stadium and they haven't paid off the debt on the existing one yet.
New revelations have recently came out concerning the public approval of
the very expensive new sports stadium approved over opposition after a last
ditch appeal by Dallas Mayor Kirk. Dallas city manager John Ware has just
resigned to take a lucrative position with the new owner and chief beneficary
of the new taxpayer subsidized arena.
In addition, it was revealed that the wife of Mayor Kirk stands to benefit from
stock options from her support of Dallas taxpayer subsidized building programs.
It seems everyone gets to go to the trough except the taxpayers in this
rich man's welfare game.
Former journalist Laura Miller, who fought the public bond program to subsize two billionaires'
plan to build the new sports arena has now been elected to the Dallas city
council. Will she continue to stand up for the interests of the by-now-very-manipulated
Dallas taxpayers?
Now the taxpayers have also approved another very expensive city building
program which is intended to enhance the value of Hicks and Perot's investment.
That is the project to develop the Trinity River area.
Look for Mayor Ron Kirk to be offered a high position with Hicks or Perot or one of their friends,
as soon as he decides to leave office. One hand washes the other.
Speaking of Ross, Jr. Everybody knows he bought the former Bunker Hunt ranch at Westlake with plans to develop it as a profit-making enterprise. When the city of Westlake balked at his demands for zoning changes, he simply had the city disbanded and is now having his property annexed by the city of Ft. Worth. More favorable treatment of his re-zoning needs appears likely.
July 8,1998 update: A judge overruled the scheme by which Ross Perot, Jr. had
the mayor fired and the town of Westlake reduced to almost nothing. The land
which he then got the city of Fort Worth to annex, he now wants Fort Worth to
disannex. Why? It seems he got his land tangled up in lawsuits. Since a judge
reinstated former Mayor Scott Bradley, who the people of Westlake reaffirmed as
their rightful mayor a day after Perot's men ousted him and disannexed his property, Bradley has sued Perot to return every acre of land which was formerly in the city of Westlake.
Mayor Barr of Fort Worth has said he will not disannex Perot's land since they
are not in the habit of doing what billionaires want and then undoing it just
to suit them and without any money or incentives changing hands. Look for Perot
to perhaps offer Mayor Barr a job or some other incentive soon.
Based on his initial stand, I congratulate Kenneth Barr, second in his family to be mayor of Ft. Worth for not simply
caving in to the wishes of Mr. Perot.
Something is sure to happen soon, since the press just reported that Fidelity
wants to buy the property for $35 million to build a company campus there. GTE
already shelved its plans to do the same and instead built its 2 million square
foot facilities in Irving's Las Colinas. Mayor Bradley also owns land wanted
by Fidelity so he has an incentive to do the deal if Perot can get his land
back from the city of Fort Worth.
Able to gauge the turn of industries as they bottom out and buy at just the right time, Rainwater has become a billionaire. Was he too early on his purchase of the psychiatric hospitals? Time will tell.
As part of Richard Scott's severance package from Columbia he was paid $5.13 million and given a five year consulting contract at $950,000 per year. His former president, Mr. Vandewater was paid $3.24 million and given a five year consulting contract at $600,000 per year.
Both former executives are allowed to exercise vested stock options within 90 days. Scott owned or had options on 9.4 million shares of Columbia stock as of May, 1997. Vanderwater controlled 617,375 shares. Columbia has agreed to pay attorney's fees and any fines or judgments against the two. In addition, the two former executives get their office expenses paid for two years including secretaries. If they move within the next two years their moving expenses are paid by Columbia/HCA. Not a bad deal for someone who just got fired!
This from reuters Washington newswire on December 13th By Laurence McQuillan
President Clinton vowed Saturday to root out waste and fraud from the nation's Medicare system, saying it amounts to an "unfair fraud tax," and called for ending overpayments to doctors for prescription drugs.
Clinton said in his budget proposal for the next fiscal year he will include a plan to clamp down on Medicare overpayments for medications, saying the move will save $700 million over 5 years.
He complained Medicare fraud costs billions of dollars every year and is an unfair fraud tax. A review by the Health and Human Services Department found Medicare paid higher prices for 22 of the most common drugs.
It is interesting that President Clinton is speaking about Medicare fraud while at the same time he is expanding the coverages which the system covers to include previously uncovered services, a practice which Senator Phil Gramm of Texas says overtaxes the system.
Certainly fraud should be rooted out. Also the legal fraud which is perpetrated by the mental health care system on a daily basis should be examined by the American people since some of this money is probably going into the coffers of politicians who propose additional coverages which these for-profit hospitals and therapists use to soak the public's money.
flash
Columbia/HCA will pay $71 million to settle a tax dispute with the
IRS. The agency had originally sought $276 million in back taxes and
interest, in the dispute involving $525 million in stock options deducted
by Hospital Corporation of America (HCA).
Under the settlement, the IRS will drop charges that HCA, which was acquired by Columbia in 1994, paid unreasonable compensation or golden parachute payments in the form of stock options to more than 100 executives and managers as part of a management-led buyout of HCA in 1989.
Charges against top executives (including Columbia Chairman and CEO Thomas Frist, and President Jack Bovender) were also dropped. Other Columbia/HCA tax disputes are still pending.
Meanwhile, the company is also considering a name change as part of its effort to change its corporate image. It's likely that "Columbia" will not be part of the new name. The Columbia name and logo have already been removed from the company's headquarters in Nashville. December 12, 1997
In January, 1998, it was announced that Rainwater was buying a $1.7 billion stake in the Las Vegas gambling industry. This would be his first venture into the gaming industry, unless one counts the gaming of the Medicare system by Columbia/HCA.
Perhaps there is synergy here after all. The gambling business can generate customers for the psyche business in their recovery programs for addicted gamblers.
August, 1998--In a new development Rainwater's Crescent Cos have backed out of their agreement to buy Station Casinos of Las Vegas. Station, which has invested $96 million since January to upgrade their gambling casinos has filed suit against Crescent. Station has almost $1 billion in debt and counted heavily on Rainwater to bring in new capital. It appears that Crescent is still pursuing other gambling industry opportunities in other states.
July 23, 1998--A fourth executive of Columbia/HCA has been indicted by a grand jury in Ft. Myers, Fla for felony fraud in the overbilling the people's Medicare system. Similar grand juries are investigating Columbia/HCA in Miami, El Paso, and other company locales. Columbia, based in Nashville, TN has been informed that the corporation is also the target of a criminal investigation. Columbia/HCA is hoping that the $billion it has set aside will be enough to cover any criminal penalties against the corporation. The stock is holding pretty steady.
The company has already set drastic downsizing and restructuring as well as reached a decision to change its name, a common practice when a formerly trusted company is caught cheating its customers.
In August, Rainwater's Crescent Cos announced they will not follow through
on their earlier intention of acquiring the other 50% of Charter Health Care
which they didn't own. Rainwater and his wife own about 15% of Magellan
Health Services which in turn owns %50 of Charter. His Crescent Cos had
intended to acquire Magellan's 50% stake in Charter in addition to the 50%
Crescent already owned.
The reason this deal fell through is due to recent large losses at Charter as well as
the continued intense government scrutiny. One can only wonder why these deals are really being
proposed to sell parts of closely held companies from one pocket to another.
Magellan intends to focus on returning Charter to profitability. A good plan if they can pull it off, yet hard to do when government
regulators are looking over their shoulders and blowing the whistle on the most
profitable games for boosting profits at the expense of the consuming public.
On Sept 8, 1998 Standard and Poors downgraded the bonds of Charter/HCA to negative based on poor earnings. Looks like Rainwater and his Crescent Cos' have finally stumbled. One source within the company said it would be a long while before any new high-ticket acquistions would take place. A previous deal with Prudential is in danger of being jettisoned.
Columbia/HCA stock has declined to about half as federal investigations continue.
With oil prices in the tank and oil stocks depressed, it would appear that Rainwater's oil investments are also hurting.
News of Oct. 2, 1998, Investor Tom Hicks is new chairman of Triton Energy LTD of Dallas after buying up to a 45% interest in this international oil producer which owns the largest producing oil field in Columbia South America and a soon to be producing huge gas field in Asia.
Update on the Westlake deal with Ross Perot, Jr. and the city of Ft. Worth. They made a deal which relinquishes the claim of Ft. Worth on Perot's land so Fidelity can build its 300 acre business campus there and Ross can sell his real estate and make his millions.
March 18, 1999--Mayor Ron Kirk went on television once again to announce that the naming rights for the new sports stadium being built by the taxpayers of Dallas for billionaires Hicks and Perot had been bought by American Airlines. All monies paid for such rights will go to Tom Hicks and Ross Perot, Jr.; none to the city or the taxpayers. American Airlines Sports Arena? Why not simply Dallas Sports Arena or Tom Landry Sports Arena or even Hicks-Perot Sports Arena?
Kirk is a big spender of money which doesn't belong to him, wonder if he doesn't have a
great future with the Hicks or Perot organizations once he leaves office, or even before he leaves office?
update on movers and shakers of Dallas--July, 1999
Thomas Hicks, owner of the Texas Rangers Baseball Team and the Stanley Cup winner Dallas Stars Hockey Club bought a controlling interest in Triton Energy, Ltd. in January. Hicks et al is now being sued for reneging on an agreed upon deal to buy a majority interest in the stock of Coho Energy.
December 23, 1999--Well, as luck would have it, Tom Hicks is now an oil man, having struck oil in West Africa in his first try there since taking the helm.
The new discovery in Equatorial Guinea offshore, flowed at a rate of 20,000 bopd and appears to be a world-class discovery, to coin a phrase from Ross Perot.
In today's headlines, December 23rd, the regional chief of Columbia/HCA Hospitals was sentenced to 33 months in prison for criminal conviction in overbilling fraud in Tampa, Florida.
Jay Jarrell, 44 years of age, had been CEO of the southwest Florida division of Columbia/HCA. Jarrell was also ordered to pay $1.7 million restitution and was fined $10,000.
Another executive, Robert Whiteside, was also convicted and sentenced to two years in prison, $645,796 restitution, and
a fine of $7500. The two men had faced maximum sentences of 30 years in prison and $1.5 million in fines.
Jarrell's attorney says they will appeal.
Jarrell has been on paid leave from Columbia/HCA and will not be fired.
The U S Attorney said in a statement that the case will be used as a model in future cases of fraud by health care providers nationwide.
The investigation had begun in 1997, and at that time, Columbia forced out its top executive officers and began a severe downsizing program, from 345 hospitals down to 220.
The company was founded in 1987 by Ft Worth financier, Richard Rainwater and Richard Scott, then a Dallas lawyer. Columbia later merged with HCA.
Richard Rainwater and his wife Darla Moore own about 8 million shares or 1.2% of the company. Neither is an officer or director, at least they were smart enough to do that.
Columbia moved its headquarters to Nashville in late 1993.
more updates on the lovely people to follow--
Texas Monthly Story on Rainwater/Columbia
Columbia to pay $745 million in fraud settlement
may 19, 2000
background info on Columbia/HCA in an index of hot links
update: November 25, 2001--As luck would have it, Sports and Communications Magnate turned oilman Thomas Hicks sold out his company Triton Oil Ltd at the high to Amerada Hess right before the price of crude oil crashed due to oversupply amidst a looming recession. Rumors had it that he was being pressed by investors to monetize their investment capital with him and he had scaled back the size and cost of his new office complex building by about half.
The new police chief in Dallas, Tyrell Bolton fired a whole group of high ranking officers and assistant chiefs, demoting others. Many of these officers sued, and all but two holdouts settled their lawsuits against the city for about $6million. The two officers who held out for more, received nothing after a judge found they were not wrongfully dismissed. Thus a prescedent for blood baths at city hall has been set and now sanctioned. Chief Willard Rollins got his settlement for back pay and retired, about 3/4 of a million as I recall. you will remember he was demoted by Bolton after failing to report an alleged fender bender with a woman which apparently never happened. Much ado about nothing? At this point, Bolton is claiming victory based on the latest ruling of the judge against the two who wouldn't roll over for the chief, one of the two testifying for Mr. Rollins in spite of Bolton's wishes to get rid of him. It would seem Bolton is at this point a very expensive choice for the city of Dallas to lead its boys in blue.
Sadly a Dallas icon, Mary Kay Ash has died at the age of 83. She raised the status of women in the workworld, basing her success method upon the golden rule and putting God first, then family, then work. Not too shabby a philosophy for us all to live by.
Afgan War nearing its final stages after the Sept 11th terrorist attack on America. God bless America, and forgive us for our many sins and failings, and return our land to its former state of grace and blessing under your protection.
dateline-June, 2006--
After a hiatus of about seven years this page has much to catch up on. The son of Columbia {HCA} founder Thomas Frist, is now Majority Leader in the US House of Representatives. God help us all!
The Bush War on "Terrorism" {what kind of war is that anyhow, and how does one go about abolishing something akin to sin, death, poverty, taxes, crime, etc?--has anybody ever won one of these nebulous wars?} has grown into War on Iraq, search for "trust me, we know where they are" weapons of mass destruction, then whoa, bait and switch motive for the war to Bush's great care for the politics of the freedom loving democratic peoples of Iraq. Too bad the war freed about a hundred thousand or so of them from their lives. Costs of the Bush Wars on Afganistan and Iraq are now being estimated at near 1 Trillion dollars. Yep, that's with a "t" folks.
President Bush looked to be an okay governor and okay president, especially with Dick Cheney there to keep him out of trouble. Whoops. Cheney isn't keeping him out of trouble at all. In fact, he seems to be instigating much of it himself. Not to mention that he shot his lawyer buddy in the face with a shotgun while on one of his many bird-hunting expeditions.
I've made a complete about face regarding support for the present administration. Too bad the rest of the country has been so slow to follow my lead, and thus we are stuck for another four year term. Seems most of what they touch is a grab for more money. Don't you wish they would just sit there and bide their time and leave everything else alone?
These so-called "reform" issues turn out to be nothing more than an attempt to steal from the poor or elderly and give it to the fat cats who already are gorging themselves at the slop trough.
While we are still on the subject, do you suppose the reason we can't demand Saudis to explain why it was their citizens for the most part who flew the planes into our people in the buildings in NYC, VA, and the failed attempt which hit the ground in Pa is that the Bush family receive too many royalty checks from their Bandar buddies. Did it disgust anyone else to see our pres tiptoeing thru the tumbleweeds down in Crawford while holding hands with the one who ought to be explaining why his country still is fomenting terrorism, not to mention acting it out against the United States in an infamous act of aggression.
New police chief in Dallas. New sheriff in Dallas Country-Lesbian. Now she failed the law enforcement test. Mayor Laura Miller has done good job in many ways. Oops, she is trying to keep SW Airlines from being able to compete on level playing field with American Airlines via the Wright Amendment. Is this the only thing which Reagan missed with deregulation?
All three of the above mentioned Dallas big wigs of city govt distinguished themselves and the city by riding in the Gay Pride Parade. Boy are they asking for it if Sodom was actually a historical place and the events there really took place as presented in the accepted historical accounts including the Bible.
All ex Mayor Ron Kirk did was invite witches into city hall to pray over it. Wonder what it was they prayed?
What do you want to bet, when the national administration decides it wants out of Iraq, that something supernatural occurs to prevent that from happening. What am I talking about?
Judgment perhaps?
more to follow later?
Links for further research
Rick Scott and Columbia/HCA
Rainwater deal to buy casinos-later he backed out
Rainwater's empire craters
Business School named after Darla Moore
T.Boone Pickens ouster by Darla Moore
Dr Frist, head of the new Columbia/HCA
Kohlberg Kravis takes HCA/Columbia private
