A Skeptical Look at Rick Scott and His
Conservatives for Patients' Rights Propaganda Machine

Stephen Barrett, M.D.

Rick Scott (1953– ), a multimillionaire former hospital chief executive officer, has emerged as a prominent opponent of President Barack Obama's health care reform plans. In February 2009, Scott announced that he had formed Conservatives for Patients' Rights (CPR) and launched a $20 million campaign to pressure Democrats to enact health-care legislation based on what he considers to be "free-market" principles [1]. Scott's ad campaign is being coordinated by CRC Public Relations, the group that masterminded the "Swift Boat Veterans for Truth" smear campaign against 2004 Democratic presidential candidate John F. Kerry. In announcing CPR's media blitz, CRC described Scott as "founder and former CEO of Columbia/HCA Healthcare Corporation; a company he helped make into one of the largest and most successful health care providers in the world." [2]  

Background History

Scott, who once partnered with George W. Bush in the Texas Rangers baseball team, now runs an investment firm and owns the Solantic chain of walk-in urgent care centers in Florida. After graduating from law school, Scott practiced law in Dallas, Texas, where he specialized in health care mergers and acquisitions [3]. In 1987, he founded and became chief operating officer of a hospital chain that grew into the $23 billion-a-year Columbia/HCA. A 1995 report described how aggressive acquisitions and mergers had turned his original $125,000 investment into 6.1 million shares of the company, worth more than $250 million [4].

In 1997, a few weeks after the FBI raided HCA hospitals in five states, Scott was ousted as CEO and three executives were indicted on charges of Medicare fraud. The FBI's investigation found that the hospital chain had been overbilling Medicare and giving kickbacks to doctors who steered patients to its hospitals. The overbilling included upcoding lesser procedures to get higher reimbursements and billing for lab tests that were not medically necessary and were not ordered by physicians. The situation was settled with a set of guilty pleas and criminal and civil fines totaling $1.7 billion [5]. The U.S. Department of Justice referred to the matter as the "largest health care fraud case in U.S. history." [6]

Columbia/HCA also had difficulty with the Federal Trade Commission, which accused it of anti-competitive misconduct. In 1998, the company agreed pay a $2.5 million civil penalty to settle FTC charges that it violated a 1995 FTC order to divest hospitals in Utah and Florida in a timely manner. The complaint also alleged that Columbia/HCA had failed to honor a hold separate agreement relating to the Utah hospitals, and had violated an earlier FTC order by failing to satisfy the conditions on which the Commission had approved its acquisition of a competing hospital chain [7].

When CNN reporter Rick Sanchez asked about what happened, Scott glibly stated that that he had left the company before the charges were filed and that he was not charged with any wrongdoing. When asked whether the company had been accused of upcoding, Scott replied: "Rick, I have no idea. . . . I never did anything with Medicare. I started a company. I bought hospitals. I bought HCA. I bought all the Humana hospitals." [8].

Scott was technically correct in stating that that he was not prosecuted. However, court records show that the illegal activities were so extensive that he knew or should have known about them [9,10]. In fact, one of the government complaints alleges that Scott was actively involved in kickback schemes in which doctors were illegally given large incentives for making referrals [10:29,32,51,54-55].

In 2003, Chain Drug Review reported that Scott had raised $5.5 million in equity financing to open new stores for Pharmaca Integrative Pharmacy, whose goal was to "create a pharmacy 'experience' for individuals seeking to improve their health and wellness through the added knowledge of dietary supplements and herbal, homeopathic and natural medicines." [11] The company now operates pharmacies in Colorado, California, New Mexico, Oregon and Washington.

Scott is also invested in Novosan LLC, which markets Viosan brand supplements that "target core health issues." [12]. Under federal law, it is illegal to market dietary supplements with unapproved claims that they can treat, prevent, cure, or mitigate disease. Viosan's Web site claims that ingredients in many of the company's products are effective against cancer, heart disease, diabetes, cataracts, senile dementia, malaria, and other major diseases [13].

CPR's Scare Tactics

CPR has been flooding the airwaves with 30-second television spots that play on common fears. The CPR Web site has posted about 25 of them. Together, they claim that current efforts at reform will (a) drive up taxes, (b) stop people from being able to choose their doctors, (c) cause many people to lose their current insurance coverage, and (d) take medical decision-making out of the hands of doctors. All of these messages are misleading. Here are six of the ads followed by my analyses:

Misleading Message #1 "Hammer"
Remember the $400 hammer? How about that $600 toilet seat? Seems when Congress gets involved things just cost more. Now, they're at it again with a government-run health plan. It'll cost more than a trillion dollars and raise taxes more 600 billion. Worse. It could put a bureaucrat in charge of your medical plan. Not you or your doctor. Tell Congress to put patients first and say no to a government-run health plan.

Misleading Message #2 "Bulldozer"
There are hundreds of choices in health care plans today. But imagine this. Is the massive Government-run insurance plan some in Congress want. This government-run plan could crush all your other choices driving them out of existence resulting in 119 million off their current insurance coverage leaving no choices in heath insurance and government in control of your health care. It's not too late. Protect your health care choices. Tell Congress to say no to a government-run plan.

Misleading Message #3: "Old Joke"
It's an old joke. I'm from the government and I'm here to help. But applied to health care, it could mean taking away your choice. Some want the government to offer a health insurance plan. But experts say a government plan could result in 119 million Americans coming off their existing coverage. They'd end up on a government-run plan leaving no choice. And that's no joke. Tell Congress any plan that takes away your choice in health care is not an option.

Message #1 refers to reports in the early 1980s that the Department of Defense had paid $600 for a toilet seat and $435 for a hammer. President Reagan later stated that the "toilet seat" was an appropriately-priced molded cover for the entire toilet system and that the hammer price was a billing error that was quickly discovered and not paid [14]. It's undoubtedly true that the U.S. Government is capable of inefficient spending, but the relevant question is whether and how this would apply to an as-yet-to-be-determined public (government) insurance program. Scott would like us to believe that any such program could not run as efficiently as private insurance plans. However, in messages #2 and #3, he claims that private plans would be driven from the marketplace because they could not compete with a public plan—in other words, the market for private plans would dry up because their premiums would be higher and people would switch to the government plan.

If Congress establishes a public plan and forces all insurance companies to accept anyone who applies for coverage, the marketplace will change drastically because all Americans will be eligible for insurance. Private insurance companies have been profitable because to maximize profits, they systematically exclude as many high-risk and chronically ill people as they can. That's one reason why health reform is desperately needed [15].

Misleading Message #4: "Squeeze"
Some of Congress's health care plans could squeeze you four ways. It could raise taxes by 600 billion dollars, even taxing soda. It could add a trillion to the federal deficit. New rules could hike your health insurance premiums 95%. You still might end up on their government-run health plan.. Tell Congress you've been squeezed enough. Say no to a government-run health plan.

FactCheck.org has noted that the 95% decrease in message #4 refers to only 5% of Americans who have health insurance and buy it on their own. The claim comes from an analysis by a group that advocates for insurance carriers that sell policies in the individual market. That analysis also doesn’t take into consideration that forcing everyone to be insurance tend to drive average premium costs downward. FactCheck.org also notes that no measures approved so far by any Congressional committee would add "a trillion to the federal deficit." FactCheck.org states that the Senate bill would add roughly $597 billion over 10 years, and the House bill that was approved by the Ways and Means Committee in mid-July would add $239 billion, according to the Congressional Budget Office [16]. Moreover, for many people, higher taxes will be offset by lower insurance cost.

Regardless of the amount of added cost, there's no historical reason to believe that private plans can be run more cheaply than nonprofit government plans. Simple comparison will show that private insurance premiums are much higher than Medicare premiums for the same coverage. Individuals who paid into Medicare (current rate is 1.45% of taxable wages) while working get Medicare Part A free of charge after age 65 and can add part B for about $2,000 a year. Comparable private insurance would cost at least twice as much. I agree with President Obama's statement that a public plan is "an important way to discipline insurance companies" because those who fail to provide adequate services at reasonable cost will lose their customers.

Misleading Message #5: "Doctor's Office"
Today you make the medical decisions that are best for you without government interference. But if Congress passes a government-run health plan, you could end up with government bureaucrats taking away your choices, getting in between you and your doctor and your personal medical decisions. It's not too late to put patients first. Tell Congress to put patients first and say no to a government health plan.

Message #5 is a simple scare tactic that is unsupportable. Insurance plans do not pay for treatments they consider unnecessary, ineffective, or "investigational." They may also have policies that restrict or penalize the use of brand-name drugs if generics (or less expensive) drugs are available. These policies are beneficial because they reduce unnecessary cost. I have seen no evidence that Medicare is more restrictive than nongovernment programs, and I see no reason to believe that any future government plan will be unnecessarily restrictive.

CPR also suggests that federal health plans will reduce free choice of doctors. There's no historical evidence for that either. A small percentage of doctors do not accept Medicare, but there's no reason to believe that an expanded public plan will have less acceptance. Tens of millions of uninsured and underinsured people now have little or no choice of provider because they have no way to pay for needed services. A public plan should enable them to access what they need.

References

  1. Mullins B, Kilman, S. Lobbyists line up to torpedo speech proposals. Wall Street Journal, Feb 26, 2009.
  2. Conservatives for Patients' Rights launches multi-million dollar campaign promoting free market health reform solutions. CRC press release, March 3, 2009.
  3. Richard L. Scott. Wikipedia, accessed August 12, 2009.
  4. Flower J. Rick Scott and the Columbia/HCA Healthcare System: Icon of greed or prophet of true reform? Healthcare Forum Journal 38(2), 1995.
  5. United States v. HCA. HCAWatch Web site, accessed Aug 9, 2009.
  6. Largest health care fraud case in U.S. history settled: HCA investigation nets record total of $1.7 billion. USDOJ news release, June 26, 2003.
  7. Columbia/HCA to pay $2.5 million civil penalty for FTC order violation. FTC news release, July 30, 1998.
  8. Politics of chaos: Who's behind health-care protests?, CNN, Aug 6, 2009
  9. Complaint. U.S.A. ex rel. John W. Schilling v. HCA - The Healthcare Company, Columbia Management Companies, et al. U.S. District Court for the District of Columbia, Case No.99-3289 (RCL) [Part of 01-MS-50 (RCL)], March 15, 2001.
  10. Complaint. U.S.A. ex rel. James L. Thompson v. HCA - The Healthcare Company, Columbia Management Companies, et al. U.S. District Court for the District of Columbia, Case No.99-3302 (RCL) [Part of 01-MS-50 (RCL)], March 15, 2001.
  11. Pharmaca gets equity to expand store base. Chain Drug Review, Dec 15, 2003.
  12. Richard L. Scott Investments Web site, accessed Aug 12, 2009.
  13. Viosan Health Generation making shady claims. Quackwatch, Aug 14, 2009.
  14. Reagan R. Interview with Lou Cannon and David Hoffman of the Washington Post, Feb 10, 1986.
  15. Hammond M, Barrett S. Why insurance reform is desperately needed. Insurance Reform Watch, Aug 4, 2009.
  16. CPR administers bad facts, again. FactCheck.org, accessed Aug 10, 2009.

This article was revised on August 31, 2009.

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