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Tenet Healthcare Settles Litigation Over Latino Pricing


January 28, 2003
Copyright © 2003
THE WALL STREET JOURNAL. All rights reserved. 

Tenet Healthcare Corp., in separate but related moves, settled litigation with a group of Latino patients who had accused the hospital chain of price gouging and unveiled a new policy of "fair treatment" for uninsured patients.

Under its "Compact with Uninsured Patients" announced Tuesday, Tenet said patients without insurance will be billed at discounted rates, subject to federal regulatory approval.

In addition, the company won't pursue legal action against nonpaying patients if they are unemployed or without other significant income. Tenet also said it would stop placing liens on such patients' homes and will provide financial counseling to uninsured patients.

Terms of the settlement weren't disclosed, but the new policy for the uninsured was hailed by the plaintiffs.

"This is a victory not only for uninsured Latinos, but for all self-paying Americans. We are applauding Tenet for doing the right thing and being leaders in the hospital sector," said K.B. Forbes, who last year set up his own nonprofit organization, Consejo de Latinos Unidos, to help poor Latinos. Mr. Forbes's group coordinated the filing last year of several lawsuits that accused Tenet, based in Santa Barbara, Calif., of overcharging.

Nearly 41 million Americans were uninsured in 2001, or about 16% of the total nonelderly population. Those figures have been rising over the past two years, as workers have lost coverage from employers in a weak economy. Latinos and other minorities make up a large percentage of the uninsured population.

Tenet, the nation's second-largest publicly traded hospital chain after HCA Inc., is moving to repair the damage to its business of an aggressive pricing policy that included outrageously high charges to the federal Medicare program and to the uninsured. Tenet has overhauled its senior management and last month announced a new pricing policy, which will result in reduced Medicare payments for so-called outlier payments, which are designed to defray the costs of care to the sickest patients.

Tenet said last month that it would seek to offer discounts to uninsured patients but didn't offer details. Now, the company has expanded and formalized its plans for the uninsured to include relaxation of its collections procedures. Tenet said the new uninsured compact wasn't directly linked to the legal settlement with Mr. Forbes's group, but acknowledged that Mr. Forbes had raised legitimate issues that had spurred some soul-searching.

"Most of us in this industry have been troubled for years by regulations and practices that meant uninsured patients -- those least able to afford their care -- often receive the largest bills and are subject to collection efforts if they do not pay," said Jeffrey C. Barbakow, chairman and chief executive.

The Tenet compact is a big win for Mr. Forbes, a former aide to Pat Buchanan, who has used his political-campaign skills to focus national attention on the way that hospitals treat people who aren't poor enough to qualify for government-paid hospital care, but who can't afford insurance.

He thinks the Tenet compact could be a model for change in the way hospitals nationwide deal with patients who must pay their medical bills out of their own pockets.

A major obstacle is federal law, which requires that Medicare charge all patients the same rates. Tenet said it expects to submit within the next two weeks a formal request for regulatory approval of its plan to offer managed-care-style discounts to uninsured patients. Mr. Forbes, who has many contacts in Washington, said he will seek meetings with Medicare chief Tom Scully, as well as Tommy Thompson, secretary of the Department of Health and Human Services to push the idea.

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