Bayonne Hospital Has Highest Billing Rates In The Nation

New York Times Business

By JULIE CRESWELL, BARRY MEIER and JO CRAVEN McGINTY

BAYONNE, N.J. — The most expensive hospital in America is not set amid the swaying palm trees of Beverly Hills or the luxury townhouses of New York’s Upper East Side.

How Much Hospitals Charge Medicare It is in a faded blue-collar town 11 miles from Midtown Manhattan.

Based on the bills it submits to Medicare, the Bayonne Medical Center charged the highest amounts in the country for nearly one-quarter of the most common hospital treatments, according to a New York Times analysis of 2011 data, the most recent available. No other hospital was at the top of the price list more often.

Bayonne Medical typically charged $99,689 for treating each case of chronic lung disease, 5.5 times as much as other hospitals and 17.5 times as much as Medicare paid in reimbursement. The hospital also charged on average of $120,040 to treat transient ischemia, a type of small stroke that has no lasting effect. That was 5.6 times the national average and 23.6 times what Medicare paid.

For those prices, the quality of care at Bayonne Medical is no better — or worse — than that at most other New Jersey hospitals. In a 2011 state hospital quality report, Bayonne Medical scored only in the top 50 percent.

But profits at the hospital, which was bankrupt in 2007, have soared in recent years, in part because it has found a way to turn some of those high billings into payments.

The increasingly contentious issue of hospital charges drew renewed attention last week when the federal government released Medicare data showing that facilities nationwide submitted widely divergent bills for the same treatments.

And while the unassuming, six-story brick hospital here holds a notable place in those rankings, others stand out as well. The midsize Crozer-Chester Medical Center in Upland, Pa., was the top biller in the country for urinary tract infections. One prestigious Manhattan hospital, NYU Langone Medical Center, charged twice as much as the equally high-end NewYork-Presbyterian to implant a cardiac pacemaker. But Medicare considers the two New York hospitals so similar it pays them both about $20,000 for the procedure.

The hospital industry is quick to say that the charges are irrelevant because virtually no one — private insurers, Medicare or even the uninsured — pays anywhere near those amounts. Medicare sets standard rates for treatments and insurers negotiate with hospitals. But experts add that the charges reflect decades of maneuvering by hospitals to gain an edge over insurers and provide themselves with tax advantages.

Until a recent ruling by the Internal Revenue Service, for instance, a hospital could use the higher prices when calculating the amount of charity care it was providing, said Gerard Anderson, director of the Center for Hospital Finance and Management at Johns Hopkins. “There is a method to the madness, though it is still madness,” Mr. Anderson said.

A close look at the finances of Bayonne Medical Center sheds light on how hospital pricing at the extremes may financially benefit an institution. The practices at Bayonne Medical also highlight a new financial strategy used by a small number of hospitals to increase their profits by “going out of network” — severing ties, and hence contractual agreements that limit reimbursement rates, with large private insurers.

Neither officials nor owners of Bayonne Medical responded to multiple calls and e-mail requests for interviews. Because the company is privately held, it does not have to release financial data.

Bayonne Medical, which was founded in 1888, was losing nearly $1.5 million a month before it filed for bankruptcy in 2007. By 2011, under new ownership and a new financial model, its patient revenue had nearly tripled and its operating income had reached $9.3 million, according to the American Hospital Directory, a publication that compiles data from Medicare and other sources about health care facilities.

The hospital’s turnabout started in 2008 when it was acquired out of bankruptcy by a consortium of buyers in a deal valued at about $41 million.

Bayonne’s purchasers included Vivek Garipalli, who worked at the private equity giant Blackstone Group before co-founding the International Sleep Network, a company based in New Jersey that treats patients with sleep apnea and other disorders. Joining Mr. Garipalli was Jeffrey Mandler, the head of a health care imaging firm. To make money from Bayonne Medical, the new buyers made some big changes in the hospital’s business strategy. First, they converted Bayonne Medical from a nonprofit to a for-profit hospital at a time when such hospitals were a rarity in New Jersey. Next, they moved to sever existing contracts with large private insurers, essentially making Bayonne Medical an out-of-network hospital for most insurance plans.

Under New Jersey law, patients treated in a hospital emergency room outside their provider’s network have to pay out of pocket only what they would have paid if the hospital was in the network. But an out-of-network hospital can bill the patient’s insurer at essentially whatever rate it cares to set. While the insurers can negotiate with the hospital, they generally end up paying more than they would have under a contractual agreement.

In recent years, Bayonne Medical put up digital billboards highlighting the short waits in its emergency rooms in an effort to attract more patients. Insurers complained that the hospital was seeking to take advantage of the higher rates it could charge.

While the law was aimed at giving patients more hospitals to choose from, it “has had the unintended consequence of rewarding folks for these inflated charges,” said Wardell Sanders, president of the New Jersey Association of Health Plans. “When people say these charges are just the sticker price and it’s meaningless, it’s not meaningless.”

Community leaders in Bayonne, fearing the hospital could close, said the buyers were always candid about the methods they intended to use to make the hospital a profitable enterprise.

“That raised a lot of concern, but what other choice did we have?” said Jeanne Otersen, who was a member of the Coalition to Save Bayonne Medical Center and is policy director for the Health Professionals and Allied Employees, a union that represents nurses at the facility.

Not surprisingly, the insurers fought back against the out-of-network model. In 2009, Horizon Blue Cross Blue Shield of New Jersey filed an injunction in New Jersey Superior Court saying Bayonne Medical’s owners had “flatly rejected” and refused to negotiate an in-network hospital contract with Horizon. When the existing agreement expired in early 2009, Horizon said Bayonne sharply increased its prices. Bayonne’s in-network charges to Horizon averaged $13,000 a day in 2008. A year later, when it was out of network, the charges soared to $29,000, the insurer said in a spring 2009 news release.

Bayonne Medical denied allegations in Horizon’s lawsuit that it was artificially inflating prices, and filed its own lawsuit against Horizon, claiming the insurer had intimidated patients and tried to get them to leave the facility before completing their treatments.

The two eventually settled in 2011, and Horizon became an in-network insurance provider. A spokesman for Horizon declined to comment on Bayonne Medical’s charges, citing terms of the settlement agreement.

Still, many other large insurance companies, including Cigna, United Healthcare and Aetna, remain out of network at Bayonne and are paying the higher bills.

“Their model is to charge exorbitant rates, particularly for emergency room services, and if the insurance companies don’t pay them, they threaten to go after the member for the balance of billing,” said Carl King, head of national networks for Aetna, whose in-network contract was also ended by Bayonne in 2008.

Like Horizon, Aetna said its bills from Bayonne Medical soared, and it also filed a lawsuit in 2011. The suit was dismissed.

Aetna’s internal data showed that Bayonne Medical’s emergency room charges jumped again in 2012 and are running 6 to 12 times as high as those of surrounding hospitals. Last fall, Mr. Garipalli bought the designer Tory Burch’s oceanside home in Southampton for $11 million, according to public records.

After purchasing Bayonne Medical, the investor group went on a buying spree, acquiring Hoboken University Medical Center in 2011 and the bankrupt Christ Hospital in Jersey City last year.

“This hospital is clearly pursuing an out-of-network strategy with a profit motive in mind and taking advantage of members who seek emergency services at their facility,” Mr. King said.

Patient/Customer

Review/Comment

Section

Nancy Figueroa

Reviewed Two Months Ago:

Quality: Poor To Fair

Chris Szczesniak

Reviewed A Year Ago

Overall Poor to fair

Bulea T. Yelp.Com

Bayonne, N.J. Writes

2/20/2013 

Awful, Staff Stinks And Lazy From Top To Bottom. Doctors Are Questionable 3rd Rate. Should be Practicing In Third World Nations, Will Do Anything For Money And A Profit, Even Experiments Without Your Acknowledge Or Permission. Alarms Were Going Off Constantly In Patient Rooms, They Would Allow them To Ring , Very Lazy, And Then Blame The Patient, For Moving Around? Outdated Broken Equipment. This Death Camp Is Totally  Unorganized, Combined With Inept Management, Tail Wagging The Dog Mentality, Incompetence Endorsed And Sanctioned, Free For All Environment.  Patients Suffering And No One Cares At The Facility. This Abortion Of A So-Called Medical Center Has All The Makings Of A Gestapo Death Camp. No Leadership? Go There If You have A Strong Desire To Die? I Am Rating This A Zero, No stars, Because I do Not want To See Anyone Die At The Hands Of These Lazy, Clueless, Incompetence. I Just discovered I have To Give It At Least One Star Or Else This Comment Won't Go Through!

Dani A. Yelp.Com

Bloomfield, NJ Writes

Review Taken From Rate MD's.Com 12/18/2012

Dr. John C.  Hahn Gastroenterologist, Bayonne Medical Center has questionable unorthodox ethics. No bedside manner, very arrogant, and conceited. Will not listen to the patient, substandard in every capacity. His antics has proven to be a liability to the patient, effecting not only the healing process, but is also a hazardous detriment to their life. Dr. Hahn should be investigated. I advice you or anyone contemplating on seeing this doctor, don't, especially if you want to live. If you have a death wish he is the perfect physician. 

Review Posted On Website:

Everyday Health Always Choose Well:

Dr. Hahn and the Bayonne Medical Center are an atrocious abomination to mankind. They're a disgrace with questionable ethics. Both shouldn’t be handling the healthcare of anyone, not even an animal. Unfortunately this is how they treat their patients? The nurses are awful, lazy and unsympathetic. All of their licenses should and must be revoked, immediately, but in New Jersey, especially Hudson County, where corrupt unskilled incompetence is rewarded, there’s no justice or punishment for this despicable murderous behavior? We have no option or recourse but to warn one another. Stay Away!

Review Posted On Website:

Everyday Health Always Choose Well:

This Doctor, John Hahn Is A Butcher, He Has No Class, He Doesn't Care About His Patients. Go To Him If You Want To Die, A Slow Painful Death. His Bedside Manner Is an Abomination. He Is Conceited, A Disgrace To Humanity. Do Not Go To This Butcher. He Has The Arrogant Gaul To Call Himself A Doctor. He Stinks. All His Atrocities Are Protected By The Bayonne Medical Center Another Meat Market. They Protect And Love incompetence On All Levels, by their employees. They Are A Disgrace. They are also protected By The State Of New Jersey , who are probably Paid Off. Go there If You want To Die. This Is A Serious Warning! Go To This Website: Close Bayonne Medical Center “Meat Market” Go There And Voice Your Opinion

What Are They Hiding

That The F.B.I. Has Been Called In To Investigate? Could It Be Their Incompetence, Carelessness Poor Service, Neglect, Falsified Documents, Improper Diagnosis’ Or Wrongful Death? This Meat Market Must Be Closed Immediately!

FBI Takes Records From Bayonne Medical Center

Hudson Reporter:

Agents for the Federal Bureau of Investigation took records from Bayonne Medical Center this week, apparently in an investigation related to an employee of Bayonne Medical Center who may have allegedly conducted illegal activities elsewhere. Dr. Mark Spektor, President and CEO of Bayonne Medical Center, said late Thursday, "Bayonne Medical Center was completely shocked when we learned of these allegations, which do not involve the hospital. We are working closely in cooperating with the FBI in their investigation." Other sources said the employee had been involved in an illegal paperwork issue and other questionable activities. Hospital officials would not comment on the nature of the investigation. Sources in Hoboken and Jersey City said the investigation does not appear to have touched upon Hoboken University Hospital or Christ Hospital, which have some of the same owners as BMC

F.B.I Investigates The Bayonne Medical Center

By Ron Zeitlinger/The Jersey Journal 

BAYONNE -- Federal agents visited the Bayonne Medical Center a number of times over the past week, and a source with limited knowledge of the probe said it involved an employee there. BMC officials declined to answer questions on what the feds were investigating. “Bayonne Medical Center was completely shocked when we learned of these allegations, which do not involve the hospital,” said BMC spokeswoman Allyson Miller, who would not say what the allegations are. “We are working closely in cooperating with the FBI in their investigation.” A spokesman for the U.S. Attorney’s Office refused to comment on the investigations.

Many Doctors Don't Report Incompetent Colleagues

Survey Shows One-Third Don't Blow Whistle on Peers Who Are Impaired or Incompetent

''I was expecting the number who said they reported to be higher," says researcher Catherine M. DesRoches, DrPH, assistant professor of medicine at the Mongan Institute for Health Policy at Massachusetts General Hospital and Harvard Medical School, Boston.

She and her colleagues evaluated responses from 1,891 doctors in a variety of specialties. "We had 17% of physicians who had direct knowledge of a colleague in their practice or hospital whom they believed was impaired or incompetent. About two-thirds of those did report that physician, but we still had about a third that did not report."

More than one-third did not completely agree that doctors should report all instances of impaired or incompetent physicians, they also found.

While some may argue that the majority do turn in incompetent or impaired doctors, DesRoches says the percent must be higher. "If you are the patient, you would want all the impaired or incompetent physicians to be reported."

The study results are in The Journal of the American Medical Association.

Impaired Physicians Survey: A Closer Look

DesRoches and her colleagues sent surveys to 2,938 doctors practicing in the U.S. in 2009 in a variety of areas: anesthesiology, cardiology, family practice, general surgery, internal medicine, pediatrics, and psychiatry.

In all, nearly 65%, or 1,891 doctors, responded.

Updating a 2004 questionnaire on the same topic, DesRoches' team asked respondents to the new survey to rate the extent to which they agreed with statements such as "Physicians should report all instances of significantly impaired or incompetent colleagues to their professional society, hospital, clinic, and/or other relevant authorities."

Among The Results:

• 64% agreed with the professional commitment to report doctors who are significantly impaired or otherwise incompetent to practice medicine.
• 69% reported being prepared to deal effectively with impaired colleagues in their practice.
• 64% reported being prepared to deal with incompetent colleagues.
• 17% said they had direct knowledge of a peer incompetent to practice in their hospital, group, or practice.
• 67% of this 17% reported the colleague to relevant authorities.

Why Not Report?

When the doctors who didn't report impaired or incompetent colleagues were asked why, they gave a variety of responses:

• 19% said they thought someone else was taking care of the problem.
• 15% said they thought nothing would happen even if they did report the problem.
• 12% said they feared retribution.

Organizational Experts Weigh In

The study results don't surprise Arthur Brief, PhD, the George S. Eccles Chair in Business Ethics and Presidential Professor at the University of Utah in Salt Lake City.

In general, he says, "people don't speak out in the workplace. Fear of reprisal is a principal cause. In the case of physicians, that could be ostracization or reduced referrals."

With the troubled economy, the fear of repercussions is probably greater, he says.

The new results mirror those seen in whistle-blowing studies of federal workers, military employees, corporate employees, and internal auditors, says Janet Near, PhD, chairwoman of management and entrepreneurship of the Kelley School of Business at Indiana University in Bloomington.

In her research, she has found the more egregious the wrongdoing, the higher the chance a worker would blow the whistle.  "In the JAMA [Journal of the American Medical Association] study, a strong majority of physicians did blow the whistle when they observed wrongdoing, similar to the internal auditors whom we studied several years ago," says Near, who co-authored the book Whistle-blowing in Organizations.

Putting It In Perspective

The take-home for patients? "Don't freak out about this," says Matthew Wynia, MD, MPH, director of the Institute for Ethics at the American Medical Association, who wrote an editorial accompanying the study.

The study finding "does not mean that bad doctors are rampant," he tells WebMD.

"I am the last to say we have a perfectly safe health care system," he says. But reporting of colleagues is only one check on the health care system, he says.

These days, he says, doctors are required to pass certification tests and get relicensed regularly in their practice area, providing more assurance of competency.

Patients can take action, too, he says, if they suspect a doctor is impaired or incompetent. "Many hospitals and larger clinics will have a patient advocate or an ombudsperson, and that person might be a very good place to start if a patient thinks they might be dealing with an impaired or incompetent doctor."

Another option, he says, is to contact the state medical board.