Bad Practices Net Hospitals More Money

This year, Medicare began requiring hospitals to report their performance on a handful of measures, such as how many heart attack patients received recommended beta blockers and aspirin. Officials say the reports will pressure hospitals to improve and save money. But officials don't use the data to punish poor performers or to steer patients to the best performers.

"We have to develop systems that address the problem and certainly not pay people for bad care," said Barry M. Straube, acting chief medical officer for the Centers for Medicare and Medicaid Services, the agency that oversees the federal insurance program.

At the same time, he said, Medicare must move cautiously. "You don't want to be too drastic until we know what we're doing," Straube said.

'Immediate Jeopardy'

There may be no starker illustration of Medicare's upside-down economics than Palm Beach Gardens Medical Center, a 204-bed hospital on Florida's east coast. The hospital, part of the Tenet Healthcare Corp. chain, boasted one of the busiest cardiac programs in South Florida in the 1990s, performing more than 1,000 open-heart operations annually.

The heart unit was plagued by infections, which came to public view in 2002 as a result of patient lawsuits.

State regulators first received complaints in 1999 but had dismissed them, state records show. In May 2002, under mounting pressure, regulators returned to the hospital for a three-day inspection.

They found that 13 of 24 heart patients whose records they reviewed had "developed serious infections after their surgical procedures, requiring more major, re-constructive surgery." The state cited and later fined the hospital for violating state law.

Florida regulators forwarded their findings to the regional Medicare office in Atlanta. A few months later, in an Oct. 15, 2002, memorandum, an official there warned colleagues that Palm Beach Gardens "continued to be out of compliance" with Medicare requirements and that those conditions posed an "immediate jeopardy to patients' health and safety."

Some patients had to have additional operations or return multiple times to the hospital as a result of infections, according to state and federal records obtained under the Freedom of Information Act.

One patient, George M. Brown, 77, a West Palm Beach real estate broker and former Marine, died after he developed an infection following open-heart surgery, according to his daughter Susan. In all, her father had five operations, she said. The family sued and eventually reached a settlement with Tenet.

"Let's just say this," Susan Brown said before signing a confidentiality agreement that was part of the settlement, "he had a lot more time left."

When reimbursing hospitals, Medicare does not distinguish between new cases and problems that result from medical errors or poor care, officials of the insurance program said. So Palm Beach Gardens was eligible for additional payments each time a heart patient had to be readmitted. Medicare officials said they could not calculate how much more the hospital was paid.