Cardiology monopoly: a lucrative game

February 3, 2010

Second in a series: Profit share versus patient care on the Central Coast


On Jan. 20, Barbara Williams, a retired civilian Army nurse who was born and raised on the Central Coast, went to French Hospital Medical Center in San Luis Obispo complaining of chest pains. She was sent home. Two days later, she again suffered chest pains.

On this occasion, she went to Sierra Vista Regional Medical Center, also in San Luis Obispo, and was diagnosed as having had a heart attack.

Emergency room staff transferred Williams to French where cardiologist Michael Famularo performed a balloon and a stent procedure. Following the surgery, Famularo told Williams to take it easy and see him in seven days.

However, when Williams arrived at Famularo’s office for her appointment, the receptionist explained she needed to pay them in cash because they did not accept her insurance, Williams said.

“How do you do surgery and then not see me afterwards?” Williams said with tears running down her cheeks. “He did a procedure on me and then left me out to dry.”

As access to cardiac care is dwindling in San Luis Obispo County, a number of local physicians, patients and others claim that a group of doctors and hospitals are conspiring to create a “cardiology monopoly” to the detriment of some cardiac patients.

These sources have told CalCoastNews during a year-long investigation that this monopoly – actually called a “cartel” by some critics – appears to have violated federal laws.

Concern is centered on a group of 13 cardiologists known as Coastal Cardiology (CC), and its practice of transferring patients to French Hospital Medical Center in San Luis Obispo from competing medical facilities in the county.

These cardiologists partly own the land on which French is located, leading some critics to question whether the transfer of cardiac patients to French presents a potential conflict of interest. An unknown number of doctors, including those from CC, purchased the land where French is located in 2005 and currently lease it back to Catholic Healthcare West (CHW), according to a $12-million promissory note.

Critics also allege that hospital administrators have struck a deal with CC to transfer lucrative cardiology care to French, providing financial incentives to these doctors.

Calls seeking comment from CC and French Hospital Medical Center were not returned.

Because CC transferred all but 18 cardiology patients to French in 2009, surgeons pronounced the patient volume too low at Sierra Vista to do work there.

Numerous local doctors and nurses allege that CC’s program of diverting patients has delayed care and, as a result, permanently harmed patients.

For example, a patient last year who suffered a heart attack and was subsequently transferred from Twin Cities to French, was left in a hallway for an hour and a half because the French cath lab, a cardiac patient examination room equipped with diagnostic imaging equipment, was already being used (French has two cath labs but normally only staffs one).

The doctor refused to utilize the cath lab at Sierra Vista.

Delays can cause permanent damage to heart muscles. Since the surgeons stopped providing backup to cardiologists at Sierra Vista last April, heart attack victims have had on several occasions to wait for treatment while the cath lab at Sierra Vista remained unused.

As a result of declining numbers, surgeons with another group, Central Coast Cardiothoracic of Pismo Beach, stopped providing surgical backup for cardiologists at Sierra Vista. Cardiologists require a backup surgeon in order to do emergency room acute interventions.

“I feel the evidence is quite strong that places with marginal volume have better results than places with small volume,” said David Canvasser of Central Coast Cardiothoracic. “If we could have two programs with adequate volume, we would be very happy.”

In 2005, CHW purchased French. A short time later, CC began transferring patients who needed cardiology tests to French from Sierra Vista in San Luis Obispo and from Twin Cities Community Hospital in Templeton, which are owned by Tenet Healthcare Corporation, even though the tests could be run at Sierra Vista.

At that time, Sierra Vista’s cardiac equipment was considered superior to that at French. Sierra Vista’s management had already purchased a high tech scanner that CC doctors chose not to use. However, when French eventually purchased the same scanner, it was then touted as a great piece of equipment.

Even though CC doctors are paid to be on-call at the Tenet and CHW hospitals, they currently transfer to French most of the Sierra Vista and Twin Cities patients they are called in to treat.

From 2005 through 2009, the number of patients CC doctors transferred from Sierra Vista and Twin Cities to French increased until almost all cardiology patients were transferred away from Sierra Vista.

For example, in 2006, CC physician Mark Bocchicchio performed 105 procedures at Sierra Vista. In 2008, that number had fallen to 83.

Last year, Bocchicchio performed only five procedures at Sierra Vista.

In 2008, CC physician and CHW board member Michael Famularo was paid $44,000 for serving as a director of French Hospital Medical Center according to French’s 2008 IRS filing.

Critics say that as part of the sweetheart deal with French, CC doctors received financial incentives to move their practices from Sierra Vista to French. As part of the move, the doctors bought out the last two years of their lease.

The Stark Law, a federal law named after United States Congressman Pete Stark who sponsored the initial bill, prohibits physicians from referring Medicare patients for certain designated health services to an entity with which the physician or a member of the physician’s immediate family has a financial relationship.

Last year, three doctors in Tucson, Ariz. who had set up a nuclear imaging business in 2006 agreed to pay the federal government $355,000 in a settlement with the U.S. Department of Justice involving violations of the Stark Law.

In another twist to this story, CC doctors routinely transfer patients needing nuclear scans away from French – to CC’s nearby office, where patients can be billed for both technical fees and professional fees, sources say. If a doctor performs a procedure such as a nuclear scan at the hospital, the physician only receives the professional fees while the hospital is paid the technical fees.

“As a former employee of CC, I can tell you that the physicians consider French’s nuclear camera to be substandard,” one insider told CalCoastNews. “French could be getting $8,000 or more in technical fees. Why are they allowing them to do this?”

In addition, local doctors allege that CC and French officials have used a number of tactics to keep other cardiologists from practicing in the area in order to protect their share of the lucrative cardiac market.

One of two non-CC cardiologists in the county, Ken Stevens, has been unable to get full privileges at French after more than a year in the area. It usually takes a highly rated, experienced doctor approximately three months to get full privileges.

Even though Stevens was asked to come from the Midwest to San Luis Obispo to run Sierra Vista’s cardiology department, he is no longer able to perform interventions there because he does not have surgical backup and French has not signed a transfer agreement with Sierra Vista.

As a result, if Stevens is working on a critical heart patient who requires an acute intervention, he has two choices: either transfer the patient to a Santa Barbara hospital or perform a procedure that requires surgical backup by himself – something his malpractice insurance carrier will not approve.

“I can’t start a procedure and then say I can’t do a full. . . ” Stevens said. “I can’t do acute interventions because there is no transfer agreement.”

As a result, patients with insurances such as Tricare and Anthem Blue Cross – insurances that CC does not accept – are not able to have numerous cardiac surgical procedures done locally. Many of these patients drive hundreds of miles to hospitals where the cardiologists accept their insurance.

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