By: Abraham Aboraya
Adventist Health System violated federal laws on physician referrals, the Altamonte Springs-based health system told bondholders in documents released May 12.
In 2013, Adventist Health System realized the relationship it had with physicians weren’t in full compliance with the Stark Law. That law prohibits physician referrals between entities, such as a physician group referring patients to a hospital, if there is a financial relationship.
From the documents released May 12:
As a part of its compliance activities, the System determined that relationships with certain physicians were not in full technical compliance with the Stark Law and elected to make voluntary self-disclosures to the federal government in 2013. The System is engaged in discussions and is fully cooperating with the Department of Justice on this matter.
Adventist Health System officials declined to be interviewed. But Kevin Edgerton, Adventist Health System’s vice president of marketing and brand strategy, confirmed that the Stark violations are still under discussion with the Department of Justice and hasn’t been settled yet.
In the broader scheme of the health care ecosystem, a Stark Law violation can point to an imbalance in the economics: If doctors are improperly referring patients to Adventist Health System facilities, it can drain patient volume from other facilities in the area. Of course, all that is dependent on where the violations happened, and what kind of violation it is, questions that can't be answered yet.
So what's the potential fallout for Adventist Health System? The likely result is a fine: The question is how big. Reading between the lines of the bond disclosure document, it appears Adventist has at least an idea of what the settlement will cost, but that it could fluctuate.
For example, Adventist Health System West, which back in the 1980s was part of the same company but is now completely separate, on May 3 announced it would pay $14.1 million to settle a Stark Law violation. And a little closer to home, Halifax Hospital Medical Center back in March agreed to pay an $85 million fine to settle Stark Law violations, both of which pale to HCA Holdings Inc.'s $840 million fine in 2000 for Medicare fraud.
Adventist is a nonprofit health system, which owns Florida Hospital and has 43 hospitals in 10 states. Nationwide, it has about 79,000 employees, and Florida Hospital had 17,600 employees in metro Orlando in 2013.
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