St. Joseph Medical Center, where three top executives went on leave two weeks ago amid a federal investigation, has brought in an outside "restructuring team" to manage the hospital and ensure that it is not violating federal health care laws, according to a memo circulated among employees.
Officials at the hospital, a 354-bed facility in Towson that is among the region's largest employers, did not elaborate yesterday on the restructuring team's role. But Beth O'Brien, who is leading the team, said in the memo that "the overarching goal is to create a compliance program at St. Joseph that parallels the same high standards as our clinical quality."
According to documents from the U.S. Department of Health and Human Services, such programs are put in place primarily to avoid fraudulent payment claims to Medicare and Medicaid. Violating these laws can lead to substantial penalties, ranging from fines to exclusion from Medicare, which would effectively shut down a hospital by cutting off a major source of income.
The internal memo, obtained by The Baltimore Sun, names John K. Tolmie, the hospital's longtime president and CEO; Sly C. Moore, chief operating officer; and Lucy Shamash, vice president of operations, as the three executives who took administrative leave.
Hospital officials would not confirm the names, saying only that executives took leave to "avoid a conflict of interest during the investigation," but employees say the departures were announced in meetings Feb. 27. Three black, hard-bound journals labeled with the names of Tolmie, Moore and Shamash were left last week in the hospital's lobby, where employees were writing them notes of support.
The scope of the federal investigation and internal restructuring at St. Joseph is unclear. But St. Joseph spokeswoman Vivienne Stearns-Elliott said in a statement: "Hospitals are highly regulated environments; investigations of this nature are becoming more commonplace."
Hospital compliance experts said, however, that it is unusual for so many executives to step aside before an inquiry is complete. Minor compliance matters often result simply in settlement agreements and modest fines.
Bret Bissey, a consultant who focuses on compliance programs and has experience with HHS investigations and their settlements, said: "I would say a significant minority require any kind of change of leadership." Bissey, who wrote The Compliance Officer's Handbook for the health care industry, said he does not have direct knowledge of the St. Joseph investigation.
The federal investigation, according to hospital officials, dates to June 2008 and involves the hospital's relationship with a physician group that it did not name. The investigation is being conducted by the U.S. Department of Health and Human Services, whose Office of Inspector General typically investigates claims of Medicare fraud or other alleged violations of federal health care laws. A spokesman for the inspector general's office said he could not provide any information.
The hospital's restructuring team is made up of five members, including two attorneys, an operations specialist and O'Brien, an executive at St. Joseph's parent company, Denver-based Catholic Health Initiatives. The sole physician on the panel, Dr. Richard Vernick, is a cardiologist who "specializes in performance improvements and physician relationships with hospitals," according to a biography circulated to hospital employees.
O'Brien's memo to employees said little about the projected course of the hospital's restructuring plan, but it said that crafting a new compliance program is its "overarching goal."
"Establishing an excellent compliance program propels the Medical Center forward, which is very important to our long-term success," she wrote.
Federal compliance programs for hospitals cover everything from ethical business practices to patient safety to billing rules and regulations. The inspector general's guidance for hospitals states: "Compliance programs help hospitals fulfill their legal duty to refrain from submitting false or inaccurate claims or cost information to the Federal health care programs or engaging in other illegal practices."