Becker's Hospital Review

10 CFO / FINANCE Sutter Health Destroys Evidence in Antitrust Case Over Inflated Prices By Ayla Ellison S acramento, Calif.-based Sutter Health destroyed 192 boxes of documents requested by plaintiffs in an antitrust lawsuit, San Francisco County Superior Court Judge Curtis E.A. Karnow stated in a Nov. 13 ruling. e lawsuit, filed by employers and la- bor unions in April 2014, accuses Sutter of abusing its market power to charge inflated prices. Judge Karnow said Sutter knew the documents it destroyed were "relevant to an- titrust issues" when the system intentionally destroyed the evidence in 2015, according to Kaiser Health News. According to a 2015 internal email cited by Judge Karnow, Melissa Brendt, Sutter's vice president and chief contracting officer in the managed care department, and an assistant general counsel authorized Sina Santagata, who served as Ms. Brendt's ex- ecutive assistant, to destroy managed care documents dating back to 1995. The doc- uments were scheduled to be destroyed 20 years later, in 2035. In an email sent to Ms. Brendt July 30, 2015, Ms. Santagata stated, "I've pushed the button … if someone is in need of a box be- tween 3/15/95 & 11/23/05 … I'm running and hiding." A Sutter spokeswoman told Kaiser Health News the destruction of the documents was a mistake. "We regret that as part of a routine archiving process we failed to preserve some boxes of decades-old hard-copy documents," she said. However, in his 12-page ruling, the judge disagreed. "e circumstances of the doc- ument destruction were, to put it as mildly as I can, decidedly odd, and Sutter has not explained them except to argue it was all a mistake," he said. "But the record shows that Sutter's conduct was more than just an inad- vertent error." e judge ordered Sutter to examine email backup tapes to look for documents cover- ing some of the same issues as the destroyed records. n CHS in Negotiations to Extend Nearly $2B in Debt By Ayla Ellison F ranklin, Tenn.-based Community Health Systems is in talks with a group of bondholders led by Franklin Resources, an asset management company, to ex- tend approximately $2 billion in bonds due in 2019, peo- ple familiar with the matter told the Wall Street Journal. The company is in talks to swap the 2019 unsecured notes for debt secured by its assets, one person familiar with the matter told WSJ. This type of transaction would be difficult for CHS to complete, as the company can only issue about $1 billion in new secured debt without permission from its lenders to waive a covenant in its revolver loans. Extending the debt due in 2019 is only a short-term solu- tion because CHS faces billions of dollars in debt matur- ities from 2020 to 2023, according to the report. CHS put a financial turnaround plan into place in 2016, which included selling 30 hospitals to reduce its heavy debt load. The company completed the divestiture plan earlier in November. With the help of proceeds from the hospital sales, CHS brought down its long-term debt load to $13.9 billion in the third quarter of 2017, from $14.8 billion in the same period of 2016. CHS ended the most recent quarter with a net loss of $110 million on revenues of $3.67 billion. That's compared to the third quarter of 2016, when the company posted a net loss of $79 million on revenues of $4.38 billion. n St. Luke's Hospital Unable to Take Medicare, Medicaid Patients After Accreditation Error By Morgan Haefner S t. Luke's Nampa (Idaho) Medical Center, a new hospital under Boise, Idaho-based St. Luke's Health System, cannot take nonemergent Medicare and Medicaid patients unless they pay out-of-pocket for services, the Idaho Statesman reports. The holdup concerns an accreditation error. St. Luke's of- ficials thought after the Nampa hospital prepared for and passed an accreditation survey, the government would allow it to bill back for patient services administered since its Oct. 30 opening. However, Medicare does not allow hospitals to bill back to the date of opening, but rather to the date of the accreditation survey. As a result, St. Luke's Nampa Medical Center may not be approved to bill federal health insurance plans until the beginning of December. "We were operating under information that was not accu- rate," Kathy Moore, CEO of St. Luke's western region, told the Idaho Statesman. "We thought that we could, once we had our survey, that Medicare allowed us to back-bill our pa- tients … back to the date of opening." St. Luke's Nampa requested an expedited survey after its billing office discovered the mistake. It hopes the survey, which is unscheduled, will take place early in December. St. Luke's Health System's recent experience with accredita- tion surveys is minimal, according to the report. Most of its new hospitals were acquired and not brand-new facilities. n

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