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More hospitals in the crosshairs over patient referrals

A surgeon uses surgical tools on a patient in a hospital operating room.
Patient referrals are the lifeblood of hospitals. Photo: Andrew Lichtenstein/Corbis via Getty Images

New lawsuits allege that large hospital systems have illegally billed federal health care programs after making improper financial deals with doctors as a way to control where patients get care.

Why it matters: Hospitals that own physician practices capture more referrals and therefore more money than their competitors — but potentially skirt federal law and inflate the cost of care for everyone in the process.

Driving the news: The former CFO of Community Health Network, a hospital system in Indiana, alleged the system employed physicians with "excessive" salaries well above fair market rates as a way to secure those physicians' referrals, and then bill higher rates for hospital services.

  • The Justice Department intervened in the case, which often means the feds believe the case has merit. CHN released a statement saying this was a "waste of the government's time and resources to pursue these meritless claims."
  • Read the full complaint.

Separately, an orthopedic surgeon in Florida alleged in a newly unsealed whistleblower case that Orlando Health pressured doctors to conduct surgeries and imaging tests only at facilities owned by Orlando Health. He says he was fired because he was still seeing patients at competing hospitals.

  • The Justice Department declined to intervene in the case for now. Orlando Health said it does not comment on pending litigation.
  • Read the full complaint.

Go deeper: "The hidden system that explains how your doctor makes referrals," via the Wall Street Journal.

Hospitals