Wednesday, November 30, 2011

Hospitals target pricey medical devices for savings

Analysis: Hospitals target pricey medical devices for savings
By Susan Kelly
Nov 29, 2011

(Reuters) - When U.S. hospitals cut expenses as the economy slid into recession, they looked first to basic supplies like lightbulbs and bandages. Next on the list: artificial hips and knees.

Implantable devices make up a sizable chunk of typical hospital budgets, and administrators are devising new ways to limit that cost as they brace for cuts to government reimbursement and treat more patients who can't pay for care.

That means methodically working through each category of device, from heart valve replacements and stents to spinal products, to see where they can negotiate lower prices. It also means creating databases of shared information on pricing between hospitals.

"We are pressing very hard on device makers because it is a big piece of the supply puzzle," said Michael Rosenblatt, vice president of supply chain management for SSM Health Care, a St Louis-based system with 15 acute-care hospitals.

Heart and orthopedic device makers have already seen their pricing power erode as patients forgo expensive treatments in the struggling economy, and the new push by hospitals will only intensify that pressure.

"Things are getting worse from a pricing standpoint. The big area of focus is the high-priced cardiac and orthopedic stuff. It's bad, and it's getting worse for everyone," said Mizuho Securities analyst Michael Matson.

Further hampering device makers are product portfolios full of mature technologies that make it harder to justify premiums. Drug-eluting stents are the most extreme example, Matson said, with annual price declines of 10 percent worldwide.

Prices also are falling, though not as dramatically, on pacemakers and defibrillators sold by companies such as Medtronic Inc, Boston Scientific Corp and St Jude Medical Inc, and orthopedic implants made by Stryker Corp and others.

"It's beginning to shift to where manufacturers understand that a lot of these products are really becoming more like commodities," said Christopher Baskel, supply chain director at Spectrum Health Hospital Group, a chain of nine hospitals based in Grand Rapids, Michigan.

Spectrum has found ways to cut costs in major device categories one by one, beginning with stents, then pacemakers and defibrillators, and recently spine devices. "We just got done doing orthopedic spine. We're starting on hips and knees next, after the first of the year," Baskel said.

To gain an advantage in negotiations with device makers, Spectrum is participating in an information exchange set up through its group purchasing organization, Novation, that allows members to see what other hospitals are paying for products. Company names are blinded.

"There is very little price transparency on these high-end sophisticated devices," said Baskel. "We've been working hard to lift the price transparency veil. We are not going to be satisfied until it's like"


Americans pay far more for healthcare than patients in other developed countries but die earlier, according to the 34-nation Organization for Economic Cooperation and Development. They are among the top consumers of costly procedures including hip and knee replacements, MRIs and CT scans. For a graphic, see:

Such statistics have put greater scrutiny on the role of device makers in driving unsustainable healthcare costs. The U.S. healthcare overhaul also gives financial incentives to hospitals and doctors to collaborate on cost savings while improving the quality of care for patients enrolled in the government's Medicare plan for the elderly.

"If you look at the healthcare system, the pressures are going to flow to those who can absorb them, and these guys have a lot of profit," Mizuho's Matson said.

Closer on the horizon, device makers face a 2.3 percent tax on their product sales beginning in 2013 to help pay for health reform. Stryker earlier this month said it would cut 5 percent of its workforce to help offset the device tax.

David Nexon, senior executive vice president for the Advanced Medical Technology Association (Advamed), which represents device makers, said some of the emphasis on cost is short-sighted. Devices such as artificial knees keep people out of nursing homes while new minimally invasive surgical techniques reduce the length of hospital stays, he said.

An Advamed-sponsored study found that medical device spending has remained constant at about 6 percent of national health expenditures over a 20-year period through 2009.

"If you look at price data, it doesn't suggest that we are a driver of higher costs, but certainly we've been a driver of greater value," Nexon said.

On the other side of the ledger, hospitals are caring for more people who rely on government programs or have no insurance at all as unemployment remains high. That is straining emergency rooms, which are required by law to provide treatment regardless of ability to pay.

The burdens brought by the struggling economy are making hospitals even more vulnerable to government efforts to reduce the national deficit by cutting the reimbursements they receive.

Premier Inc, a purchasing alliance for more than 2,500 U.S. hospitals, estimates that healthcare providers can expect cuts in reimbursement payments to reach 15 percent to 20 percent of current levels by 2017. So when hospitals look for places to cut, medical devices make even more sense.


Hospitals are already losing thousands of dollars each time they perform one of the top dozen device implant procedures on a Medicare patient, according to Premier, which maintains a large database of patient claims and consults with its members on ways to improve their finances and quality of care.

For example, hospitals in a recent Premier analysis lost almost $15,000 on average for each cardiac valve replacement procedure performed on a Medicare patient.

Hospital administrators compare that with the robust profit margins traditionally enjoyed by medical device makers.

Operating margins for large medical device makers typically range from 25 percent to 28 percent, compared with 7 percent to 10 percent for publicly traded hospital operators, according to Thomson Reuters data. The spread on gross margins is even greater, with device makers in the 70 percent to 80 percent range compared with 35 percent to 55 percent for hospitals, according to analysts...

Attorneys allowed to gather more evidence in Tri-City wrongful termination suit

Attorneys allowed to gather more evidence in Tri-City wrongful termination suit
Nathan Scharn
Nov. 29, 2011

OCEANSIDE — A U.S. District Court judge issued an order Monday allowing attorneys to gather more evidence in wrongful termination suits between former Tri-City Healthcare District administrators and their former employer, including trustees of the public health care district.

Judge Thomas J. Whelan ruled that attorneys for the administrators would be able to take depositions from defendants involved in a meeting held at Coco’s Restaurant in Vista on Nov. 20, 2008 regarding the discussion at the restaurant. They were fired in 2009 in an overhaul by the elected board of Tri-City’s leadership.

Whelan concluded that the meeting, attended by an attorney and now Chairwoman Rosemarie Reno and trustees Kathleen Sterling, George Coulter and Charlene Anderson, violated the state open government law called the Brown Act.

The law requires public notice of discussions of public business by a majority of elected officials on a board. At the time, only Sterling, who has since been dropped from the case, and Reno were on the board. Coulter and Anderson had been elected, but had not yet assumed office, which constituted a future majority, Whelan said in the ruling.

“The Brown Act also prevents future majorities from gathering privately to make collective commitments affecting the future of the local agency without public input,” Whelan wrote.

The get-together at Coco’s is not related to another controversial dinner meeting, held at West Steak and Seafood in Carlsbad in May 2010 and attended by Reno, Sterling and Coulter, though that meeting has been a factor in several lawsuits, including criminal hearings.

Much of the Coco’s meeting has been kept secret under Magistrate Judge Bernard G. Skomal’s July 18, 2011 discovery order, which held that the discussion at the meeting fell under attorney client privilege. Whelan reversed that, saying the meeting violated the law “in furtherance of a present criminal act,” the ruling said, and was thus exempt from the privilege.

The depositions could provide significant facts in the wrongful termination suit between the former administrators and the health care district.

Trustees fired nine employees after placing them on paid administrative leave. Then-Chief Executive Arthur Gonzalez received a severance package in 2009 worth as much as $1 million. Seven others sought damages in excess of $100,000.

Earlier this year, former vice president of strategic services Allen Coleman received $385,000 and former vice president of performance improvement William “Terry” Howell received $390,000 in settlements, their attorney Ray Artiano and Tri-City officials have confirmed. The other five employees are still pursuing the lawsuit.

The other employees fired were Suellyn Ellerbe, chief operating officer and chief nurse executive; Robert Wardwell, chief financial officer; Doreen Sanderson, vice president of human resources; Daniel Groszkruger, director of information systems; and Ondrea Labella, director of patient business services.

Whelan denied part of the ex-administrators’ contention that Skomal had erred as a matter of law.

Public Tri-City Healthcare District serves residents in Carlsbad, Oceanside and Vista.

Kaiser Permanente whistle-blower Emily Ryan from Roseville, California

My name is Emily Ryan. I'm a Courage Campaign member and psychiatric social worker for Kaiser Permanente in Roseville, California. Recently I came forward, along with several colleagues, to blow the whistle on Kaiser's illegal and morally inexcusable mental health policies.

We've risked our careers to contribute to “Care Delayed, Care Denied” a report by the National Union of Healthcare Workers, which was featured in USA Today¹ and The Huffington Post.² Now, Kaiser will use its army of lobbyists and PR flacks to try to stop an investigation. This "non-profit" corporation has made more than $5.4 billion in the last three years and pays its CEO a salary of $9 million a year. Unless Governor Brown's Department of Managed Health Care pursues an investigation, Kaiser's billion dollar spin machine will succeed in silencing our voices.

We need your help. Please click here to demand Governor Brown start an investigation.

If you or anyone in your family suffers from mental illness or acute emotional pain, you know how damaging it can be. If they have Kaiser, they're likely to have an experience like Timm Sinclair, who told us,

My mother, a Kaiser member of 20 years, is 77 years old and has Parkinson's. She also suffers from chronic recurrent depression and severe anxiety disorder. The difficulties in getting her psychological and psychiatric needs met at Kaiser have been distressing for her and for me. Along with a revolving cast of doctors and therapists we have encountered lengthy delays of up to three months. I find it inconceivable that an organization that is supposedly dedicated to ensuring that their members 'Thrive' would allow this to happen.

Join us to demand Governor Brown direct the Department of Managed Health Care to investigate Kaiser!

Kaiser puts profits before patients. This year, they raised rates an average of 9.5% and are planning another hike -- their second in six months -- this January, but they refuse to hire enough staff to serve their patients adequately. Our report -- based a survey of over 300 Kaiser mental health professionals practicing at 57 Kaiser facilities in Northern and Southern California -- revealed the following:

• 90% report there is insufficient staffing at their clinic;

• patients, including those suffering from major depression and thoughts of suicide, are frequently forced to wait four weeks or longer for return appointments, despite California law requiring they be seen within ten business days;

• Kaiser falsifies patient scheduling records to conceal these delays from state regulators;

• and Kaiser often funnels patients into group therapy even when clinicians believe that individual therapy would be more effective.
Please ask the Governor to stand up for Timm, his mother, and the thousands of patients who rely on the country's largest HMO for their mental health services.

Emily Ryan
Kaiser Permanente psychiatric social worker and Courage Campaign member

1. USA Today
2. Huffington Post

Saturday, November 26, 2011

Lack of record access drives up costs at L.A. hospitals for poor

Lack of record access drives up costs at L.A. hospitals for poor
L.A.'s safety-net hospitals are scrambling to match others nationally that use electronic records and integrated systems to manage care for low-income patients and cut costly hospitalizations.
By Noam N. Levey
Los Angeles Times
November 25, 2011

The emergency room at White Memorial Medical Center on Los Angeles' Eastside was buzzing when paramedics arrived on a Friday night with an elderly man slurring his words and complaining of aching bones.

The nurse in the receiving bay immediately ran through standard triage questions: "Are you diabetic? Do you have high blood pressure? Are you allergic to any medications?" Each drew the same response: "I don't know."

The hospital and doctors had no record of the man or his medical history. And with their only guide a piece of crumpled paper they found tucked into the man's pants that seemed to indicate he might have had cancer, doctors had to order a full diagnostic work-up, including blood tests and an EKG to check his heart.

It was another night of high-priced detective work at one of America's urban hospitals.

"We're mostly flying blind here," said Dr. Brian Johnston, the senior emergency room physician at White Memorial, shaking his head at the high costs generated by the lack of records and unnecessary testing.

Waste bedevils much of America's fragmented healthcare system, driving up already skyrocketing costs. As health spending overwhelms government budgets, the stakes are especially high for safety-net institutions like White Memorial that serve the country's poorest patients, largely at taxpayer expense.

The best safety-net systems — in Denver, Dallas, New York and elsewhere — have found ways to practice medicine more efficiently, using electronic records and integrated systems to manage care for low-income patients and cut costly hospitalizations.

In Los Angeles, Chicago and many other cities, local healthcare officials are now scrambling to catch up.

"There is really no system of care here," said Allen Miller, a Los Angeles consultant who is working with private hospitals, clinics and physicians on a potentially trailblazing initiative to link together medical providers that care for some of Los Angeles County's neediest patients...

Consumer advocate Harvey Rosenfield takes on health insurers

Here's a biography of Harvey Rosenfield.

Consumer advocate Harvey Rosenfield takes on health insurers
Rosenfield, who used California's initiative process to regulate auto insurance rates more than two decades ago, is preparing a new initiative that would force health insurers to get state approval before they could raise premiums.
By Marc Lifsher
Los Angeles Times
November 26, 2011

The former "Nader's Raider" who used California's initiative process to regulate auto insurance rates is headed back to the ballot. This time he's spoiling to take on health insurers.

Harvey Rosenfield, the combative attorney and consumer advocate who wrote California's landmark Proposition 103 more than two decades ago, is preparing a ballot initiative that would force health insurers to get state government approval before they could raise premiums.

Stricter controls are needed to put some restraints on a industry that's reaping fat returns for shareholders and multimillion-dollar salaries for executives while consumers struggle to pay for coverage, Rosenfield said. In California, average premiums for family coverage rose 7.5% in 2010, according to the California HealthCare Foundation. They increased by 3% nationally for the same period. About 1 in 5 Californians, or 7.2 million, have no health insurance.

"Everybody knows the horror stories," said Rosenfield, founder of the advocacy group Consumer Watchdog. "Premiums are going through the roof. A lot of people can't get health insurance at any price. Benefits are going down. Company CEOs are getting rich."

Consumer Watchdog submitted a draft of its initiative to state authorities this month, a first step toward placing the measure on the November 2012 ballot. Getting it there won't be cheap. The Santa Monica group would need to gather signatures from at least 505,000 registered voters, a process that could cost around $3 million, according to election experts.

If approved by voters, the measure would give California the country's most stringent regulation of the 35 states that have some form of health insurance oversight.

Health insurers denounce the initiative as big-government meddling that could lead to higher rates and less coverage for everyone.

"Giving a politician the power to set prices does not address the real reason healthcare costs are increasing and could threaten patients' access to medical care," said Charles Bacchi, executive vice president of the California Assn. of Health Plans.

The industry could spend more than $100 million trying to defeat Consumer Watchdog's proposed initiative, said Michael Mattoch, a former insurance committee staffer in the state Legislature and current executive at auto insurer USAA.

But Rosenfield and Jamie Court, Consumer Watchdog's president, say they like their chances. Private focus groups and polling show 80% of voters queried would support reining in health insurers, they said.

Some independent analysts share their assessment.

"I imagine this would be quite popular going into a [national] election. Insurance companies are not exactly the most favorite institutions," said Larry Levitt, a senior vice president at the Kaiser Family Foundation, a national healthcare think tank not related to the Kaiser Permanente health maintenance organization.

Rosenfield is no stranger to David versus Goliath battles.

Helped by his mentor, consumer activist Ralph Nader, Rosenfield in 1988 persuaded California voters to pass Proposition 103. That landmark ballot initiative slashed car insurance rates and forced auto insurers to get approval from state regulators for future premium hikes. The law also applies to rates for homeowners' and most other lines of property and casualty insurance.

Outspent by the opposition $120 million to $3 million, Rosenfield's tiny operation prevailed by tapping into the frustration of California motorists fed up with skyrocketing premiums. Despite dire predictions that carriers would flee the state, California's auto insurance market remains competitive. Premiums have declined by about 30%, saving Golden State motorists billions, according to the Consumer Federation of America.

Rosenfield said he's again resorting to a ballot initiative to allow California voters to do what the Legislature hasn't been able to do — rein in soaring health insurance premiums. Bills to give the state more authority to regulate rates have been bottled up in Sacramento for years; health companies and insurers have contributed millions to lawmakers to keep it that way, Rosenfield said.

Health insurance "fits perfectly with 103," Rosenfield said.

Insurance industry opponents counter that Rosenfield and his colleagues have other reasons for wanting to expand Proposition 103. Over the last two decades, they've reaped millions in legal fees and settlements from insurance companies while declaring themselves champions of the little guy.

Bacchi of the California Assn. of Health Plans criticized Consumer Watchdog as "a self-anointed consumer advocate," pursuing "yet another deeply flawed policy proposal that is ultimately designed to line their pockets with cash from expensive lawsuits."

Rosenfield, who has shaved his mustache, buffed up his physique and upgraded his wardrobe since his Nader's Raiders days in the 1970s and 1980s, said he welcomes insurer insults. That's "how I know we're doing our job," he said.

But the proposed health insurance initiative promises to earn Rosenfield more adversaries than usual.

Carefully inserted in the measure is a one-sentence "poison pill" that could nullify a proposed auto insurance initiative that's also aimed for the November 2012 ballot. The crafty tactic was aimed straight at Rosenfield's old nemesis: George Joseph, the chairman of Los Angeles-based Mercury General Corp., who is helping to bankroll the auto insurance measure.

That initiative, which would offer certain discounts to longtime insured motorists, would weaken Proposition 103, Rosenfield said, by effectively raising rates for drivers who were previously uninsured. Last year voters defeated a similar ballot measure, with the losing campaign costing Mercury $16 million. Undeterred, Joseph already has pumped $8 million into the new effort, which officially is sponsored by the American Agents Alliance, a trade group.

Rosenfield said his wording would restate and expand a controversial provision of Proposition 103 that previously uninsured drivers should not be penalized with higher insurance rates. It would take effect if both Rosenfield's and Joseph's measures were approved but Rosenfield's gets more votes.

The poison pill, insurers argue, is unconstitutional and is likely to be challenged in court on the grounds that initiatives by law can deal with only one subject.

Rosenfield contends that his measure would withstand such a challenge from insurers.

"We fight just as hard as we can for consumers," he said.

Thursday, November 24, 2011

Kaiser Permanente's Charlie David Morgan, Ph.D. angry because SEIU Threatens To Dissolve CKPU

SEIU Threatens To Dissolve CKPU
Adios Andy
December 8, 2009

The Coalition of Kaiser Permanente Unions is the group of unions that, along with KP management, make up the Labor-Management Partnership which was so instrumental in bringing KP up out of the ashes of the strikes in the late 1980's. SEIU is evidently so afraid of losing its monopoly position within KP that they are threatening to sunder the entire coalition, rather than to admit NUHW as a member in that coalition...One of the members of the SoCal KP units wrote a letter to the Executive Director of the CKPU regarding SEIU's threat...

Mr. August,

I am a Kaiser employee, Clinical Psychologist, and currently a UHW member. I have been very involved in LMP as a UBT member both locally and regionally, LMP co-lead, and trained LMP facilitator, and highly value the LMP process. I received your statement today from the CKPU regarding membership to CKPU and participation in LMP.

Firstly let me say that I have always respected your work with Kaiser and LMP. You have done wonderful things in the past to bring employees and managers together to discuss ways to make Kaiser the best place it can be for our health plan members and for employees.

Today however I am very disappointed with your statement and decision. I certainly do understand that Andy Stern is the head of CKPU and you are under his employ, and as such are in a difficult position to follow his demands or lose your job.

You should know that we as members ARE supporting NUHW and WILL win our decertification vote because we have been very disappointed with the direction Andy Stern and the UHW trustees have taken our union and do not agree with their policies, corporate unionism, and back-door deals with management.

I am very disturbed that you do not support our members' right to determine which union we want to represent us. You are threatening that if we choose NUHW through a federal legal process, exercising our rights, that you will not allow us to be part of CKPU or LMP.

Is not a union made up of it members and members voices? Is not unionism a democratic process where we as members have a right to take their union in the direction we feel is best for us and for those we serve? Does not LMP consist of union members (no matter which union) working together with management for the good of all?

I just don't understand how banning NUHW from participation does anyone any good. It does not benefit CKPU, LMP, Kaiser, or any of the other unions in the coalition. It is simply one more of Mr. Stern's scare tactics to not lose his union members.

As of today I have lost all respect for you and see now that you are simply a puppet in Mr. Stern's hands to manipulate and carry out his agenda within Kaiser. I don't think you understand that you are dealing with intelligent, highly educated professionals within these three professional bargaining units, who are not going to be fooled by SEIU (and now CKPU) propaganda and will not fall to your threats.

Charlie Morgan, Ph.D.
Clinical Psychologist
Kaiser Permanente San Diego

Stutz Artiano Shinoff & Holtz loses in Nevada pharmacy case (Walgreens)

See Stutz Artiano Shinoff & Holtz on San Diego Education Report.
See blog posts re Stutz law firm.

November 23, 2011



D/B/A WALGREENS, Respondent.
No. 54805.
Supreme Court of Nevada.

Bradley Drendel & Jeanney and Bill Bradley, Reno, for Appellants.
Stutz, Artiano, Shinoff & Holtz and James F. Holtz, Las Vegas, for Respondent.

By the Court, PARRAGUIRRE, J.:
In this appeal, we consider the duty of care that a pharmacist owes his or her customers. Specifically, we are asked to clarify whether a pharmacist's only duty is to fill a customer's prescription with the correct medication and dosage or if, under certain circumstances, a pharmacist may have a duty to do more. We conclude that when a pharmacist has knowledge of a customer-specific risk with respect to a prescribed medication, the pharmacist has a duty to exercise reasonable care in warning the customer or notifying the prescribing doctor of this risk. Having determined that the pharmacist in this case had knowledge of a customer-specific risk, we conclude that the summary judgment record before the district court was inadequate to conclude, as a matter of law, that no genuine issues of fact remain as to breach of duty and causation of injury. Accordingly, we reverse the district court's summary judgment in favor of respondent and remand this case to the district court.


In December 2005, Helen Klasch visited Dr. Fredrick Tanenggee, M.D., for the first time. While filling out paperwork concerning her medical history, Klasch indicated that she might have a sulfa allergy. People with sulfa allergies generally experience minor skin rashes when exposed to sulfa, but in a small number of cases, the sulfa exposure may cause a toxic reaction in the person's skin, potentially leading to death.

Although still largely unpredictable, people who have experienced a past allergic reaction to sulfa are at a heightened risk for suffering this toxic reaction in the event of future sulfa exposure. After some further discussion with Dr. Tanenggee's assistant, this possible sulfa allergy was recorded on Klasch's medical chart with a question mark ("Sulfa?").

In July 2006, Klasch returned to Dr. Tanenggee's office, complaining of "abdominal fullness." After performing routine tests, Dr. Tanenggee diagnosed her with a urinary tract infection. Dr. Tanenggee told Klasch that under normal circumstances, her infection could be treated most effectively with Bactrim, a sulfa-based antibiotic. Given the notation in her chart, however, Dr. Tanenggee asked Klasch to clarify how certain she was of her sulfa allergy. After some further discussion, Klasch downplayed the previous notation and asked Dr. Tanenggee to write her a prescription for Bactrim. Dr. Tanenggee complied, and Klasch dropped off the prescription at Walgreens Pharmacy on her way home from Dr. Tanenggee's office.

Later that same day, Klasch's caretaker returned to Walgreens to pick up the prescription. Upon asking a pharmacy employee to release the prescription, the employee told the caretaker that Klasch's prescription had been "flagged" by Walgreens' computer system while it was being filled. Walgreens maintains a "patient profile" for each of its customers, which its pharmacists use to identify any potential allergic reactions, harmful interactions with other medications, or adverse side effects that a customer may have to a particular medication. The employee told Klasch's caretaker that the prescription had been flagged because Klasch's patient profile indicated that she was allergic to sulfa-based drugs. The caretaker then asked the employee to call Klasch and to speak with her directly...

Saturday, November 19, 2011

Kaiser doctors sue their nurses over CNA strike

I'm glad someone at Kaiser is standing up to unethical bosses.

Kaiser, docs sue nurses over walkout
San Francisco Business Times
by Chris Rauber, Reporter
November 18, 2011

UPDATE: Chuck Idelson, a spokesman for the Oakland-based California Nurses Association , didn't directly respond to the substance of Kaiser Permanente 's lawsuit in U.S. District Court. But he told the San Francisco Business Times late Friday that Kaiser allegedly is taking the step as part of plans for an East Coast expansion move, to New York, New Jersey and the Washington, D.C., area (where it already has a regional unit). "Kaiser has dreams of empire," Idelson said, and wants to fund its expansion on the backs of workers. He said that is CNA's only statement on the suit.

Kaiser Permanente’s Northern California hospital unit and medical group filed a federal lawsuit Thursday that would require the California Nurses Association to go to arbitration over its recent decision “to violate its contract by calling a strike," the health care system said Friday.

Kaiser is asking the U.S. District Court for Northern California to order the CNA into arbitration over what it called a “serious breach” of the union’s contract by a one-day, Northern California-wide strike against the nonprofit system Sept. 22 to 23.

Kaiser said the union’s contract, which went into effect Sept. 1, includes a “mutually agreed upon provision that prohibits work stoppages and strikes for the life of the three-year contract.”

The Oakland-based health care giant said it filed a grievance against the nurses’ union on Oct. 18, “using the dispute resolution process spelled out in the contract,” but that the union rejected the request Nov. 7, claiming the no-strike provision didn’t apply, because only CNA has a right to file a grievance. CNA said at the time it went out in sympathy with a short strike by the National Union of Health Care Workers, which walked out at a number of Kaiser and Sutter Health facilities.

Roughly one-third of the 17,000 CNA-represented RNs who work at Kaiser facilities in Northern California crossed picket lines and showed up at work during the late September work stoppage, according to Kaiser's Nov. 18 statement.

Kaiser sues California Nurses Association over strike
November 18, 2011
Kathy Robertson
Sacramento Business Journal

Kaiser Permanente has filed a lawsuit in federal court alleging the California Nurses Association violated a no-strike clause in its collective bargaining agreement when it called a statewide strike by Kaiser nurses in September.

Billed as the largest nurses’ strike in state history, CNA called a massive walkout Sept. 22-23 by as many as 22,700 nurses, including 17,000 at Kaiser, 5,000 at Sutter Health and 700 at Children’s Hospital in Oakland. Other workers at other unions joined the walkout, too.

CNA’s current contract with Kaiser — which went into effect Sept. 1 — includes a mutually agreed upon provision that prohibits work stoppages and strikes for the life of the three-year contract, Kaiser alleges in the lawsuit. The strike required Kaiser to hire hundreds of temporary nurses and additional staff, limit elective medical procedures and transfer critical care through special teams, all at considerable expense.

Kaiser filed a grievance against the union Oct. 18, requesting a discussion to address the issue using the dispute resolution process spelled out in the contract.

CNA rejected the request Nov. 7, claiming the no-strike provision does not apply to sympathy strikes and that only the union has the right to file a grievance under the contract, court documents allege.

Kaiser seeks a court order compelling the union to arbitrate Kaiser’s grievance.

CNA spokesman Chuck Idelson said the union has a strong history — known to Kaiser — of providing support for other unions.

Tri-City Hospital board member Charlene Anderson's nursing license: revoked/stayed/probation

John Graham:
While I agree with her probation and stayed revocation for what she did, I don't think Charlene Anderson should be a member of the Board until she has successfully completed her probation. Nurses are held to a very high standard and members of the State Board of Registered Nursing should be even more squeaky clean. It is not fair to the thousands of of other nurses who somehow find the time to get their charting properly done even when they are busy or understaffed. If she is as wonderful a nurse as many have commented, then she needs to do the right thing and resign from the Board in order avoid the appearance of corruption and double standard for members of the governing Board in her profession. I have seen many fine nurses in this state fired or had their licenses revoked for much less.

"...The state nursing board voted Thursday to accept the recommendation of an administrative judge to revoke her license, then stay the revocation and place her on probation... The board hands down stayed revocations to about 100 of the state’s 390,000 registered nurses each year.

"Anderson’s “failure to document the disposition of narcotics is a very serious matter,” Walker wrote. “'If she did not administer the medications to patients, she created a potential for harm by depriving them of prescribed medications. If she did administer the medications to patients, she created a potential for harm by creating a risk for over-medication.'”

Tri-City official gets probation as nurse

Three-year penalty stems from undocumented drugs
Aaron Burgin
Nov. 18, 2011

The state Board of Registered Nursing has put Tri-City Healthcare District board member Charlene Anderson on three years probation for failing to account for prescription painkillers while she worked at Scripps Memorial Hospital in Encinitas in 2006.

Anderson, who was elected to the Tri-City board in 2008, was accused of failure to account for 23 Percocet tablets, seven Vicodin tablets and three tablets of Tylenol with codeine removed from a hospital dispensing machine from May to August of that year. Scripps fired Anderson a month later.

Anderson, 61, expressed regret for the incident in a prepared statement and said she would not step down from the board.

“I regret my apparent lack of complete documentation five years ago at Scripps when after correctly removing medications ... and correctly administering them to the patients, I apparently did not complete documentations on the chart in some cases,” she said. “My patients were not and have not ever been harmed and my nursing practice has been enhanced by this negative experience.

“Am I going to resign? Absolutely not. I did nothing wrong that affects my tenure on the Tri-City board,” she said.

The state nursing board voted Thursday to accept the recommendation of an administrative judge to revoke her license, then stay the revocation and place her on probation.

That action is one step short of outright revocation, said a spokesman with the state Department of Consumer Affairs, which oversees the nursing board. The board hands down stayed revocations to about 100 of the state’s 390,000 registered nurses each year.

The judge in the proceeding, Robert Walker, said that while Anderson’s actions were very serious, there was no evidence that patients were harmed by her actions. He noted that she had a nearly complaint-free record in her 20 years as a registered nurse.

Walker also noted that Anderson was not accused of taking the drugs or failing to give them to patients — just not properly charting them. [Maura Larkins comment: It would be next to impossible to find out what happened to those pills. The state didn't find Anderson innocent of consuming the drugs; it just couldn't prove anything, so it didn't charge her. “If she did not administer the medications to patients, she created a potential for harm by depriving them of prescribed medications. If she did administer the medications to patients, she created a potential for harm by creating a risk for over-medication...On the other hand, there is no evidence that (Anderson) actually harmed any patient,” Walker wrote.]

Anderson’s “failure to document the disposition of narcotics is a very serious matter,” Walker wrote. “If she did not administer the medications to patients, she created a potential for harm by depriving them of prescribed medications. If she did administer the medications to patients, she created a potential for harm by creating a risk for over-medication.”

“On the other hand, there is no evidence that (Anderson) actually harmed any patient,” Walker wrote. [Maura Larkins comment: Whew! Both Charlene and her patients were lucky that no harm occurred.]

Walker denied the state’s request to recover $46,456 from Anderson as restitution for investigation costs. The judge said the state did not properly substantiate its costs.

The State Attorney General’s office filed the administrative complaint against Anderson in January 2010, four years after the incidents occurred.

A four-day administrative hearing akin to a criminal trial was held in July. Anderson’s attorney argued that she wasn’t able to chart the medication because the hospital’s postpartum unit, where Anderson worked, was too busy and understaffed.

State authorities alleged that understaffing was not an excuse.

As part of her probation, Anderson must submit to mental health and psychiatric testing after Walker expressed concern that Anderson knew the rules and still failed to abide by them.

“Is there a medical problem that caused her to forget to do things she intended to do?” Walker wrote. “Because the evidence suggests these concerns, protection of the public requires that there be a professional assessment of the respondent’s ability to practice safely.”..

Friday, November 18, 2011

When doctors rely on attorneys who lie: Tri-City Healthcare attorney contradicts her own witness

The tale of the out-of-control Andersons (CEO Larry and board member Charlene--no relation) and their odd little co-conspirators continues at Tri-City Hospital.

Paralegal says Tri-City report is wrong
She balks at hospital's version of events involving board member Kathleen Sterling
Aaron Burgin
San Diego Union-Tribune
Nov. 17, 2011

Oceanside — In making their case that elected Tri-City Healthcare District board member Kathleen Sterling should remain excluded from closed session meetings for the rest of her term, administrators cited what they considered traitorous activity.

At a meeting last month, Tri-City attorney Allison Borkenheim offered a sworn affidavit saying that paralegal Linda Elsner informed district officials that Sterling in 2003 or 2004 divulged confidential information to her law office, which was suing the district.

In response to the report, the public hospital board voted 5-1 to keep excluding Sterling from closed session, where issues such as CEO Larry Anderson’s performance and the strategic direction of the hospital are discussed.

The Watchdog contacted Elsner to verify Tri-City’s statements. Elsner said Tri-City officials misrepresented what she said — that she specifically told them Sterling shared only public information.

“How can they get away with this?” Elsner said. “How can they say I said these things and put them out as fact when I didn’t say them?”

Tri-City officials declined to be interviewed and issued a statement that they stand by Borkenheim’s affidavit and the belief that Sterling divulged confidential information to Elsner.

“The accounting set forth information provided by Linda Elsner, which she reported to at least four individuals in separate conversations, that Kathleen Sterling actively provided assistance to parties directly involved in legal matters against Tri-City Medical Center,” the statement said.

“Kathleen Sterling received information, some of which was confidential, while she was a member of the board. Under the state’s Ralph M. Brown Act, information deemed to be confidential is expected to remain confidential, and not arbitrarily made public at any point, unless the board authorizes its release. Ms. Sterling used that information to aid parties in litigation against the hospital.”

Elsner worked for personal injury lawyer Jennifer Lynch, who was pressing an ultimately unsuccessful lawsuit against Tri-City on behalf of patient Thomas Corelis over a surgery.

Elsner said she met Sterling while working on the Corelis case at the Vista courthouse. Sterling approached her and asked her if she was doing work on a lawsuit against Tri-City. When Elsner said yes, Sterling said she could give her information that could help.

Sterling later met with the attorney and pointed her in the direction of a report by the Joint Commission, an accreditation agency, on Tri-City.

Reached Thursday, Sterling confirmed that she gave public information to the plaintiff’s legal team at the time — when she was not a board member — in the hopes it would improve care at the hospital.

“I never gave them anything confidential,” she said.

Elsner said that this year, a former intern at her law firm mentioned the encounter to Charles Perez, the president of Tri-City business partner Medical Acquisition Co.

For months, Elsner said, Perez and Tri-City officials sought her cooperation in their ongoing probe of Sterling for alleged disloyalty to the hospital.

On April 25, Elsner said, she received a call from the former intern, again asking for information. Elsner said she told her that it was not a good time to contact her because she was going through personal and financial issues, including a car that needed the engine replaced, which would cost $3,000.

“She said, ‘Charlie could help you out, right?’” Elsner said. “And then Charles said, ‘Of course. All we need you to do is talk to these people and tell them what you know about Sterling.’”

Elsner said she did not accept any money. She said she told her story to District Attorney’s investigators, who took no action on a Tri-City complaint against Sterling regarding the incident. The DA’s office declined to comment.

Perez told The Watchdog, “My company had a professional relationship to Ms. Elsner for a couple of years and appreciated her law firm business referrals. I have never offered Ms. Elsner any money to break attorney-client privileges. My only involvement at the meeting was to introduce Ms. Elsner to Tri-City.”

Elsner said that on May 3, she met with Anderson, Borkenheim and Perez — the meeting Borkenheim described in her affidavit. Lynch, Elsner’s boss, attended by speaker phone.

Contacted for this story, Lynch corroborated Elsner’s account that Tri-City officials were told Sterling divulged no confidential information to them.

Borkenheim’s affidavit says she strongly believes that Sterling helped Elsner with other cases against Tri-City.

“I believe this because Ms. Elsner, when recounting discussions with Ms. Sterling to me said ‘in the first case...’ leading me to believe that there were other cases or matters in which Ms. Sterling sought to give or gave assistance,” the affidavit says.

Elsner told The Watchdog that’s not so. According to Elsner and a records search by The Watchdog, her law office had no other cases against Tri-City.

Thursday, November 17, 2011

Kaiser Permanente has processes "when issues related to quality of care arise"

"Every Kaiser Permanente physician is subject to review and evaluation to ensure the quality of care they provide. Like all health plans and hospitals in California, Kaiser Foundation Hospital Fresno has processes in place to monitor and evaluate the quality of care. And when issues related to quality of care arise, we have processes to take appropriate action."

In my case, Kaiser instituted a quality review on August 9, 2011. Then it cancelled the review on August 16, 2011.

Sure, Kaiser has processes. That statement is true. But Kaiser Permanente does not use those processes in a reasonable manner. It does not take appropriate action; that implication in the article below is false.

Our Point of View
Kaiser Permanente
October 16, 2007
Response to Los Angeles Times' Article About Fresno Medical Center

A recent story in the Los Angeles Times raised concerns about patient care involving a perinatologist on the professional staff at Kaiser Foundation Hospital Fresno. We take these issues very seriously. In regard to the Fresno Hospital matter, we took action more than two years ago to significantly limit the practice of the perinatologist and to monitor the care he delivers, and reported him to the state medical board.

Kaiser Permanente has more than 11,000 highly qualified physicians and specialists serving the needs of more than 6 million members in California. We expect each of them to provide the highest levels of quality care and believe in their clinical excellence.

Every Kaiser Permanente physician is subject to review and evaluation to ensure the quality of care they provide. Like all health plans and hospitals in California, Kaiser Foundation Hospital Fresno has processes in place to monitor and evaluate the quality of care. And when issues related to quality of care arise, we have processes to take appropriate action...

Kaiser fired Dr. Moran for complaining about Hamid Safari, the doctor who killed two babies

Kaiser retaliation for patient advocacy

Kaiser fired the Chief of the OB/GYN Department for complaining about a doctor who has since become notorious for killing babies. At the same time, Kaiser offered $2 million to the baby-killing doctor to resign.

Dr. Gilbert Kenneth Moran's lawsuit says he was fired for complaining about "Dr. X," whose negligence resulted in three deaths at Kaiser in Fresno, which is where Dr. Hamid Safari worked when his notorious misbehavior occurred.

The lawsuit states:

...Between 2002 and 2004, while he was Chief of the OB/GYN department and oversaw the quality of care committee, petitioner complained to hospital officials about substandard patient care given by a doctor identified as Dr. X. The physician-in-chief told petitioner to stop complaining, and dismantled the quality of care committee; he demoted and otherwise disciplined petitioner as a result of the complaints. Dr. X's negligence resulted in the death of three patients.

Petitioner was told he could work harassment-free at Kaiser-Bakersfield if he resigned his partnership, returned to employee status, and accepted a reduction in pay and job security; he was told he would likely be promoted to partnership again after one year, rather than the usual three years. Petitioner agreed to this. His first day of work for SCPMG in Bakersfield was January 8, 2007. He subsequently filed a lawsuit alleging retaliation for patient advocacy; that suit was resolved on June 29, 2009. Petitioner was later told he would not be promoted to partner at Kaiser-Bakersfield; he was terminated effective February 22, 2010...

Hamid Safari: Kaiser tried to bribe baby-killing doctor
Kaiser Permanente Thrive Exposed
March 8th, 2008

[How do you like that? Only at Kaiser can you kill two babies and endanger countless others, only to be handed $2 million of member money to quietly resign. The pattern should be glaringly obvious by now. Kaiser always tries to lie and buy its way out of a scandal, and only does the right thing when its malfeasance becomes a media event. Note that even after Safari turned down the settlement, Kaiser still would have declined to suspend him if only CMS hadn't rejected the first plan of correction (pdf).]

From the Fresno Bee:
Kaiser doctor rejected a deal
Hospital offered beleaguered Safari $2 million to resign.
By Tracy Correa

Three months before Kaiser Permanente suspended a Fresno physician at the center of a state investigation into the deaths of two babies, the hospital offered him $2 million to resign.

Dr. Hamid Safari, who treated high-risk pregnancies, said he refused the Nov. 28 offer because he wanted to continue working and believes he has done nothing wrong.

“I have spent my life to be a perinatologist and help patients, mothers and babies. The money was not my intention or my goal in life,” Safari said.

Kaiser officials acknowledged that they have discussed a settlement with Safari, but would not confirm the $2 million figure. The hospital suspended the doctor last week.

“We have considered many alternatives over time regarding Dr. Safari leaving the organization, including settlement, because we believed it was in everyone’s best interest,” Linda Monte, interim senior vice president and area manager for Kaiser’s Fresno hospital, said in a written statement.

The doctor and his lawyer, Stephen Schear, said Kaiser buckled under the pressure of bad publicity. They also criticized Kaiser for telling reporters about the suspension.

Schear said Safari was not interested in taking any amount of money in exchange for his career.

“Our counteroffer was to sit down and work things out so he could continue to treat patients at Kaiser Fresno,” he said.

Safari said a Kaiser representative showed up at his home about 5 p.m. on Feb. 29 and handed over a letter stating that he was suspended, effective immediately. He had been off that day for his deposition in a lawsuit filed by two Kaiser doctors who said they were retaliated against by hospital administration for questioning Safari’s competence.

The suspension followed months of criticism and public pressure on the doctor and Kaiser Permanente since details of the deaths — in 2004 and 2005 — became public late last year.

In September, the California Medical Board accused Safari of gross negligence — charges that could lead to loss of his California medical license. A hearing is pending.

In 2004, Safari waited more than three hours before performing a Caesarean section on a patient even though the baby was in distress, according to the accusation. The baby girl, who was deprived of oxygen, died 10 months later.

The other case occurred in 2005, when Safari allegedly severed the spinal cord of a baby boy, a twin, in what has been described by investigators in documents as a brutal delivery.

Medical staff and nurses have said they had raised questions about Safari’s competence but hospital administration failed to act.

Drs. Gilbert Moran and Robert Rusche are now suing Kaiser for retaliating against them after they complained about Safari.

Safari, in turn, accuses Moran — the former head of the OB/GYN department — and Rusche of complaining to the state medical board as part of a vendetta against him. He said they did so after he complained to superiors that one of the doctors was abusing his power on a quality review committee to go after doctors he didn’t like.

In January, federal health officials issued a critical 68-page report following an investigation into the situation. The report suggested that if Safari had been monitored more closely, the deaths might have been prevented.

Days later, Susan Ryan, the hospital’s then-top administrator, stepped down.

Schear said the bad publicity had become too much and Kaiser was determined to get rid of Safari. He also said that even though the doctor is suspended, he is collecting his Kaiser paycheck and is still entitled to due process, involving hearings and appeals, that can take months or years.

Schear said the $2 million settlement offer was an attempt to quickly disassociate the hospital from Safari and shortcut that process.

Schear provided The Bee a copy of a Nov. 28 letter from a Los Angeles law firm he said represented Kaiser. He blanked out all but one passage in the letter, which reads, “Kaiser will pay Dr. Safari $2 million, provided Dr. Safari complies with all conditions set forth herein.”

Schear said the letter also set forth conditions, including a confidentiality agreement and a pledge that Safari wouldn’t sue Kaiser.

“The essence was, you leave and we give you the money,” Schear said.

He said $2 million was a starting point and that the offer came “with indications they would pay him significantly more than that if he immediately resigned.”

Schear said he believes Kaiser moved to suspend Safari because it doesn’t think the medical board will end up revoking his license when all the facts come out.

“They just decided to throw him overboard,” Schear said.

Safari said he has performed well in recent months and that there have been no reports of any problems since 2005. He said his patient satisfaction rates are the highest they have ever been and only eight Kaiser patients have asked to be reassigned to another doctor.

“I think the action [suspension] was taken because he’s performing too well and building up a track record,” Schear said. “The longer he goes without problems, the harder it is to get rid of him.”

Safari now serves primarily as a consultant in high-risk births. Kaiser restricted Safari in July 2005 from performing vaginal deliveries and made the restrictions permanent in April 2007.

Wednesday, November 16, 2011

Prime Healthcare Files Antitrust Lawsuit Against Kaiser, SEIU

November 16, 2011
Prime Healthcare Files Antitrust Lawsuit Against Kaiser, SEIU
California Healthline

On Tuesday, Prime Healthcare Services filed a lawsuit alleging that Kaiser Permanente and the Service Employees International Union have violated the Sherman Antitrust Act by colluding to drive Prime out of the Southern California marketplace, the Inland Valley Daily Bulletin reports (Edwards, Inland Valley Daily Bulletin, 11/15).

The lawsuit was filed in federal court in San Diego and names Kaiser Foundation Health Plan and its subsidiaries, and SEIU-United Healthcare Workers West as defendants (De Atley, Riverside Press-Enterprise, 11/15).


The lawsuit is the latest in a series of allegations between the parties (Inland Valley Daily Bulletin, 11/15).

Kaiser previously has sued Prime, claiming that Prime facilities "trap patients" and "submit false and inflated bills" (Shimura, Victorville Daily Press, 11/15).

Details of Prime's Lawsuit

Prime's lawsuit alleges that SEIU, in exchange for wage concessions, has aided Kaiser's efforts to diminish Prime's market viability.

According to Prime, SEIU promoted false media stories about problems at its hospitals, including reports of high rates of blood infections. The lawsuit says SEIU also campaigned against the health system's efforts to acquire Victorville-based Victor Valley Community Hospital (Inland Valley Daily Bulletin, 11/15).

In addition, Prime's lawsuit claims Kaiser has withheld more than $100 million in reimbursements for care delivered to Kaiser members who received treatment at Prime facilities (Victorville Daily Press, 11/15).

The lawsuit is seeking injunctive relief to prevent activities that Prime alleges SEIU and Kaiser participated in, including disrupting Prime's business and "coercing or threatening patients" not to seek care at Prime hospitals. The lawsuit also seeks unspecified monetary damages (Inland Valley Daily Bulletin, 11/15).

Prime Implicates Lawmaker, News Organization

Meanwhile, Prime alleges that a "California State Legislator" who urged officials to look into high blood infection and malnutrition rates at its facilities had a "financial interest" in Kaiser and SEIU. The lawmaker implicated is Sen. Ed Hernandez (D-West Covina), the Pasadena Star-News reports. Rob Charles, a spokesperson for Hernandez, dismissed any suggestion that Hernandez helped facilitate a "conspiracy" between Kaiser and SEIU.

Prime also alleges that the news organization California Watch has served as a publicity arm of SEIU and published stories unfavorable to Prime (Luciano-Adams, Pasadena Star-News, 11/15). Mark Katches, editorial director of California Watch, said the organization has operated independently and has used state data and court documents to produce "a series of revelatory and groundbreaking stories" about Prime (Jewett, California Watch, 11/16).

Kaiser, SEIU Respond

Kaiser responded in a statement by saying it found the lawsuit "deeply puzzling."

Kaiser said, "At first glance, Prime's allegations appear to be that Kaiser Permanente's model of ... care, coupled with our ... labor management partnership, are somehow conspiracies designed to illegally compete with Prime Healthcare" (Victorville Daily Press, 11/15).

SEIU in a statement called Prime's lawsuit "frivolous" (Inland Valley Daily Bulletin, 11/15). David Tokaji, an SEIU-UHW spokesperson, added that the lawsuit is an attempt by Prime to deflect attention from allegations and investigations against the system (Victorville Daily Press, 11/15).

Monday, November 14, 2011

Survey Reveals Problems With Mental Health Care At Kaiser Permanente

Who sits on the boards of those "independent rating agencies" and State of California offices that "recognize the quality" of Kaiser Permanente's mental health services? And who sits on the boards of "independent" agencies who rate other aspects of Kaiser's medicalcare? Kaiser doctors and administrators!

Survey Reveals Problems With Mental Health Care At Kaiser Permanente
November 14, 2011
By Kenny Goldberg

SAN DIEGO — A union-backed survey of providers at Kaiser Permanente shows widespread dissatisfaction with the HMOs' mental health services. The union representing mental health professionals has been negotiating a new contract.

The National Union of Healthcare Workers surveyed more than 300 mental-health providers at Kaiser facilities in California. Many said they're not given enough time to evaluate patients, and they're not able to schedule return appointments in a timely way.

Jim Clifford has been a therapist at Kaiser's outpatient clinic in Otay Mesa for 10 years. He said mental-health care has gotten short shrift.

"We're trained to know what adequate care is and to provide it," he said. "And it's very troubling ethically to be in a position due to poor staffing not to be able to provide that. And it's been a chronic situation at Kaiser."

Clifford said Kaiser has refused to beef up staffing so that mental-health patients can get better care.

In a written statement, Kaiser officials said the quality of their mental health services has been recognized by independent rating agencies, and the state of California. The HMO said the NUHW survey was inaccurate and biased.

Long Wait Times The Norm At Kaiser Mental Health, Study Finds

Says company posting record profits while patients being denied the care they need.
Suisun City Patch
By Karina Ioffee
Nov. 15, 2011

Patients who seek mental health services at Kaiser Permanente have to wait for weeks for appointments, are routed into group therapy even when they need individual attention and are not given proper initial evaluations, according to a new report by the National Union of Healthcare Workers, that represents some 2,500 mental health clinicians.

The study is based on a survey of over 300 Kaiser mental health professionals practicing at 57 Kaiser facilities in Northern and Southern California, along with dozens of open-ended interviews with clinicians and patients.

Among its findings:

Kaiser mental health clinics are insufficiently staffed, with patients often forced to wait four weeks or longer for return appointments. That’s despite the fact that California state regulations require that patients be seen within ten business days,

Staff conduct accelerated initial patient evaluations that fall short of recommended clinical standards, which are then miscoded incorrectly in order to avoid penalties,

Patients that are funneled into group therapy even when their diagnoses call for individual therapy,

Falsified patient scheduling records that conceal appointment delays from state regulators, through practices such as "shadow" paper records and deliberately canceling and rescheduling patients' appointments while falsely attributing the cancellation to the patient.

Clinicians interviewed for the study describe a pattern of “deceptive practices by Kaiser administrators that routinely compromise the health and safety of thousands of patients suffering from emotional pain and distress in order to save the company money,” according to the report, titled “Care Delayed, Care Denied.”

Kaiser has more than 6.6 million members and is California's largest HMO. Since 2009, it has reported profits of $5.7 million and last year paid its Chief Executive Officer George Halvorson $6.7 million.

“It’s clear to us that decisions are being made from an accounting standpoint, that Kaiser’s approach to treatment is about making money for Kaiser and basically denying patients the treatment they deserve,” said Jim Clifford, a therapist for Kaiser in San Diego.

Click here to listen to interviews with Kaiser mental healthcare providers and patients

In an issued statement, Kaiser said the findings of the study were inconsistent with its patient and provider survey data and that the HMO regularly performs better than the standards set by the state of California.

“We are disappointed that the NUHW is going to such effort to attempt to discredit the great work performed every day by our clinicians and mental health therapists,” the company said. “They (therapists) provide timely, high-quality mental health care services to our patients, day in and day out, and whenever emergencies arise.”

The company went on to say that it offers Urgent Services where patients in crisis can get same-day or next-day appointments along with consultations for patients who have been admitted to a hospital or those who arrive in the emergency room. In addition, Kaiser says it offers a mix of individual and group therapy and defends the latter as a proven and effective method for mental health treatment.

Now, NUHW is demanding an investigation by the California Department of Managed Health Care, that regulates Kaiser's HMO plans and the Department of Insurance, which regulates the company's fee-for-service offerings.

They also want the Attorney General's office to look into potential unfair business practices at Kaiser mental health.

Kaiser Permanente found to be "cooking the books" regarding mental health care

Dr. Robert Schannon and Linda Thornton are in charge of Kaiser Permanente's Behavioral Health Department in San Diego.

Study: Calif. mental patients force to wait past limit
By Kelly Kennedy
Nov. 13, 2011

WASHINGTON – Mental health patients in California are often forced to wait for care beyond the 10-day limit required by state law, which is a troubling sign for the 2010 federal health care law's requirement to treat mental health patients in the same way as those suffering from other ailments, a survey of providers shows.

A survey of 305 mental health providers at 57 California Kaiser Permanente facilities found that mental health patients do not receive needed care in a timely manner, that managers ask employees to "cook the books" so it appears they meet a California law for an initial appointment within 10 days, that patients are funneled into group therapy because there are not enough clinicians for one-on-one care and that clinicians do not have time to perform basic assessments.

The survey was conducted by the National Union of Healthcare Workers.

The California findings are troubling for the nation because the federal health law requires insurers to pay for mental health issues as they would for any standard health issue, often referred to as parity.

Staffing has "always been a problem," but recent parity laws have made it worse, said Clement Papazian, a Kaiser Permanente licensed clinical social worker out of Oakland, where the organization is based.

That doesn't surprise Patrick Gauthier, director of AHP Healthcare Solutions, a research group that looks at behavioral health. He said that the problem is growing across the nation and that it will continue to grow until "parity" is better defined: what treatments should be covered and who can — or should — provide them. Even so, he said, until mental health care is integrated into the health system — rather than appearing as an extra service — it will be easier for plans to cut costs there.

According to the California survey, more than half of clinicians said their next available appointment was more than 10 business days away, and more than 65% said return appointments took longer than 10 days.

The California Psychological Association released a statement saying its members were "deeply troubled" because "if true, the care of the patient is being compromised."

Don Mordecai, the regional director of mental health and chemical dependency services for Kaiser Permanente in Northern California said his clinicians "provide timely access to high-quality mental health care for our members."

"The survey information described to us does not align in any way with our own data, nor with independent evaluations of our services," he said.

Sunday, November 13, 2011

$2 Trillion US Health Care Sector Featuring Giants such as Kaiser Permanente, HCA Ascension and Tenet Healthcare

Research and Markets: 2011 Report on the $2 Trillion US Health Care Sector Featuring Giants such as Kaiser Permanente, HCA Ascension and Tenet Healthcare
Press Release
Posted on 11/10/11
Benzinga Staff

Research and Markets ( has announced the addition of the "Health Care Sector" report to their offering.

The US health care sector includes more than 780,000 hospitals, doctor offices, emergency care units, nursing homes, and social services providers with combined annual revenue of more than $2 trillion. Major companies include Kaiser Permanente, HCA, Ascension Health, and Tenet Healthcare. The sector is highly fragmented: the top 50 organizations generate just 15 percent of revenue. Hospitals are the least fragmented industry: the top 50 hospitals account for 30 percent of total hospital revenue.

The sector includes about 6,500 general hospitals; 75,000 nursing homes and residential care facilities; 13,000 diagnostic labs; 30,000 outpatient clinics; 140,000 dentist offices; 220,000 doctor offices; and 150,000 family and social services providers.

Worldwide, health care expenditures total about $5 trillion annually, according to Swiss Re. Total health spending (both public and private) as a portion of GDP ranges from about 7 percent in countries such as Estonia to 17 percent in the US, according to the Organisation for Economic Co-Operation and Development.


Demand for health care services is driven by demographics and advances in medical care and technology. The profitability of individual companies depends on efficient operations and, in the case of many nonprofit health care providers, obtaining grants and federal funds. Large companies have advantages in accessing the latest medical research, buying supplies, offering a wide range of services, and negotiating contracts with health insurers.

Key Topics Covered:

Industry Overview

Quarterly Industry Update

Business Challenges

Business Trends

Industry Opportunities

Call Preparation Questions

Financial Information

Industry Forecast

Web Links and Acronyms

For more information visit

Source: First Research

Research and Markets
Laura Wood, Senior Manager
U.S. Fax: 646-607-1907
Fax (outside U.S.): +353-1-481-1716

Tuesday, November 8, 2011

How is Kaiser Permanente in San Diego? Lawsuits and investigations
thepinksquid Moderator
Join Date: Jun 2007
Location: San Diego, California
How is Kaiser Permanente in San Diego?

Hello my knowledgeable City-Data friends...

How is Kaiser Permanente care in San Diego? I'm considering changing my health insurance to Kaiser Permanente next year, but I have to admit I'm a little apprehensive as I've never had anything like KP before.

The Kaiser plan I could get through my employer is extremely inexpensive and offers a health reimbursement account, so I'd essentially have no out of pocket costs other than my paycheck deduction (which is very low). Right now I have a Health Net HMO... and it's fine, but unfortunately my doctor is retiring so I have to choose a new one anyhow. I'd love a PPO but the one my employer offers is super $$$. I'm fortunate to not have any major medical issues and my yearly costs are pretty low.

Any thoughts? Are some San Diego Kaiser facilities better than other ones? I live close to the Zion and Vandever hospitals, but would gladly go further for better care. It seems some people LOVE Kaiser, and others love to complain about it.

Is there a reason it's so cheap? Is it better to spend the extra money not go with Kaiser? Thanks!

Moderator of San Diego, San Jose & San Francisco sub-forums. =]

Senior Member

Join Date: Oct 2008
Location: Eagle River, Alaska & San Diego, CA

Yes there is a reason. It is at times inferior health care. Kaiser is built on a platform of efficiency first not care. Hats off to the hard working people there but I have had several friends have recent horror stories this year.

As a clinician I would advise you to stay away. As a consumer I can say you get what you pay for.

...I hear this quite a bit also. If you are in good health, KP may be better for you. If you are sick, really ill or really injured in that event KP is last on my list. In addition, they traditionally have much poorer scores for acute inpatient care. The nice(ities) fall off when you are hospitalized. In addition, your access to key clinical doctors is limited by their system. As I said, I have had two friends this year alone who were misdiagnosed (one who did not have stage 4 lung cancer but instead an infection she got while caving hystoplasmosis) after months of telling people she was dying she finally saw another specialist outside the KP system. I also had good experiences with pediatrics for my children. If you get sick, really sick KP is the last place one wants to be IMHO.

Maura Larkins
To find out how Kaiser compares, go to US News and World Report hospital ranking:

I agree with AADAD that Kaiser is fine when you're healthy or when you have typical, though serious symptoms. You won't find Dr. House at Kaiser. They don't have the time to deal with any symptoms that aren't on their list of things to look for. They have a tendency to miss cancer diagnoses (both my friend and my mother were never seen by a Kaiser oncologist before their deaths from cancer). Most Kaiser facilities have outdated technology. (I see in the rankings in US News (see above) that the Medical Center on Sunset in Los Angeles is an exception.)

Kaiser Permanente Member Services is a joke. They cover-up serious problems. I recently complained that my X-rays taken on June 15, 2011 at the brand-new Garfield Specialty Center in Kearny Mesa were unavailable to my doctors. Member Services told me that the X-rays had not been saved electronically, but that the technician had saved a few X-rays on thermal paper and sent me some blurry photo-copied pages. Yet their advertising says all X-rays at Garfield Specialty Center are digitized! Are they lying to me or are they lying to everybody else???? I put my documents and X-rays on this webpage:

I complained to Member Services that the medical report about the X-rays was compromised. Kaiser's story was that the report had not been written by the urologist who had been present on June 15, 2011 and had seen the large series of X-rays as they were being taken, and spoken to me and examined me, but rather that the official report was written 5 days later by a non-urologist who had seen only 5 images on thermal paper! Also, the report had the wrong date of the procedure, the wrong referring doctor, and it was signed three days BEFORE it was supposedly written.

What did Member Services do with my complaint about tampering? They tampered with it! They changed it to say I was unhappy about not getting an anti-fungal medication--from a urologist! I did not want or need an anti-fungal medication; also, it is gynecologists or primary care doctors, not urologists, who deal with yeast infections. Kaiser can't even come up with a clever cover story.

Perhaps not surprisingly, the urology department in San Diego had lower than expected survival rates last year and average survival this year. About half of all hospitals have "better" or "much better" than expected survival rates.

Maura Larkins
Junior Member
Join Date: Nov 2011
Location: San Diego

They're playing the percentages. They take care of the simple cases.

(Originally Posted by earlyretirement)
Definitely I think you will find people that are happy with Kaiser and probably will find people that will complain as well. One thing I'll say is that for all of our visits with our doctors, someone from Kaiser followed up with a phone call the next day to see how everything went and even asked if we had any complaints. I've never had an health care insurance provider do something like that before. So definitely I do think they care about customer service and satisfaction.

They're playing the percentages. They take care of the simple cases--and almost all cases are simple. They want to please the majority of their patients. But they make a lot of profit, and they do it by cutting corners and denying care strategically. When they get taken to court, they say that the case was unusual, and they couldn't be expected to know what to do.

Making people happy does not make them healthy.

That pleasing the consumer is the trend now in health care to satisfy the consumer irrespective of solving the complex medical problems that they arrive with (on their own). From Scripps to Kaiser and Sharp to UCSD patient satisfaction scores are the goal. To make it worse, Medicare is linking payments to how well patients were "pleased" and satisfied. Nothing in my experience could be more undoing to the goal of sustaining a healthy person.

The steps to take now are to educate yourself and ask questions. Doctors and nurses are trained to solve problems related to our human bodies. We do better when we have a person who tells us about themselves. I cannot even begin to tell you the number of times the patient feeling satisfied gets directly in the way of helping them to be healthy down the road.

Kaiser is known for pleasing it's customer and in serious illness they would rather do that than solve the more complex problems. I concur on the cancer dx issues related in the post above. Kaiser puts it footmark on prevention. Once you are really sick, you would be better off in another hospital system. Stay alert to your bodies changes take notes do research and ask questions because in 5 years the nurse at your bedside will not be interested in asking key questions which would potentially save your life, they will be asking you how you want your coffee.


Not to resurrect a dead topic, but here's something that Huffington Post wrote about Kaiser's mental health services.

Kaiser Permanente Makes Billions In Profits While Overburdening Staff: Report

Maura Larkins
Location: San Diego

Why would this be a dead topic? This is fascinating, and seems to reveal that Kaiser is unrepentant about practices in the San Diego Psychiatry Department that led to a lawsuit and investigation in 2000:

Kaiser's Prescribing Policy Leads To Lawsuit, Ethics Concerns
Psychiatric News
May 5, 2000

One of the nation’s best-known HMOs has ignited a furor by requiring psychiatrists at one of its California facilities to write prescriptions for patients they have never seen.

Kaiser Permanente’s policy for psychiatrists in its San Diego area facilities stipulates that when they receive a request for a prescription for a patient that a staff psychologist, social worker, or family therapist is seeing, they are to comply with the request and write the prescription without scheduling a visit with the patient.

Widespread publicity about the policy, which was the focus of an April 13 Los Angeles Times article, has generated heated responses from psychiatrists and others concerned about how such a policy could seriously compromise patient care and put psychiatrists in ethical jeopardy.

The article revealed that a state agency was investigating this practice and that a psychiatrist who lost his job after refusing to follow the policy was suing Kaiser Permanente.

The day after the article appeared, APA issued a press release strongly condemning the policy as an example of "unethical" medical practice....

Jury Orders UC-Davis To Pay $7.6M to Paraplegic Woman

November 01, 2011
Jury Orders UC-Davis To Pay $7.6M to Paraplegic Woman
California Healthline

On Friday, a Sacramento Superior Court jury awarded $7.6 million to an Elk Grove woman after determining that UC-Davis Medical Center employees misread an MRI exam and that resulting complications caused her to become paralyzed. A UC spokesperson said in statement that an internal review of the case showed that "the medical care provided ... was appropriate." The jury awarded the woman $6.4 million to cover lost wages and the cost of lifetime medical and attendant care, as well as $1.2 million for pain and suffering. However, California's medical malpractice law caps damages for pain and suffering at $250,000. If the jury's verdict stands, the plaintiff would receive $6.67 million.

"Sacramento Jury Tells UC Davis To Pay $7.6 Million to Paraplegic Woman" (Furillo, Sacramento Bee, 11/1).
"Elk Grove Woman Wins $7.6M in UC Davis Malpractice Suit" (Robertson, Sacramento Business Journal, 10/31).

Kaiser Permanente and Sutter challenge medical peer review process

I think these are bad doctors with a good cause. Peer review usually results in doctors and nurses covering for their friends and allies who make mistakes. The only doctors who are targeted are those who are unpopular, which often has nothing to do with competence. In fact, sometimes doctors are unpopular simply because they don't go along with group goals that put the interests of doctors ahead of those of patients.

Dr. Mark Fahlen sounds like he lost the confidence of nurses, and I believe that nurses are sometimes right and doctors are sometimes wrong. I saw a nurse save a patient's life when an Emergency Room doctor ordered the patient released, and the nurse intervened and said they should wait for test results. The test results revealed that the patient had a deadly condition, malignant hyperthermia. Nerve damage had already begun. She ended up fine after about nine days in the hospital. Thank you, dear nurse!

Also, Dr. Fahlen seems to be imperious and arrogant. If he had the patients' interests at heart, he would have explained to the nurses why his orders needed to be followed.

And of course, Dr. Hamid Safari has outrageously bad judgment. Like Fahlen, he failed to communicate and lost his temper. Those two babies should not have died. He yanked a baby who was in no distress at all out of his mother's uterus, killing it. Instead, he should have patiently explained to the mother why a Caesarian section was needed.

Nov. 07, 2011
Doctor files suit against Modesto hospital
He's challenging procedures used for complaints
By Ken Carlson
Modesto Bee

A Modesto physician is one of two plaintiffs in a federal lawsuit filed Monday, which challenges a process used by California hospitals to review complaints against doctors.

Attorneys filed the lawsuit in U.S. District Court in San Francisco on behalf of Dr. Mark Fahlen, a Modesto kidney specialist who saw patients at Memorial Medical Center, and Dr. Hamid Safari, a perinatologist who worked for Kaiser Permanente's Fresno hospital.

The lawsuit charges that California's peer review process violates federal due process laws and constitutes a violation of physicians' civil rights.

Named as defendants in the lawsuit are Sutter Central Valley Hospitals, which manages Memorial, and Oakland-based Kaiser Permanente.

The lawsuit charges that Sutter terminated Fahlen's privileges in January without proper cause. The physician said he is unable to see his patients who are taken to Memorial in emergencies or because of their insurance coverage, his attorney said.

Some of those patients are in advanced stages of kidney failure, he said.

The lawsuit seeks to reinstate Fahlen at Memorial.

Stephen Schear, an attorney for the two physicians, said the state has delegated peer review authority to health care corporations, giving them power to destroy doctors' careers without due process of law.

"California's peer review system for physicians is the only legal system in the United States where a powerful corporation is permitted to target an individual's career and then pick the judge and jury who decide the matter," Schear said in a press release.

From 2003 to 2008, Fahlen brought numerous complaints to Memorial administration regarding his allegations of nursing errors and insubordination.

He alleged that nurses ignored or disobeyed his patient care orders and changed orders without his consent.

Confrontational complaints

Nurses, in turn, complained to administrators that Fahlen was confrontational with staff and that his conduct interfered with patient care.

A hospital executive committee recommended in August 2008 that Fahlen's privileges should be terminated. He exercised his right to have a hospital-appointed judicial review panel hear testimony and evidence.

Even though the review panel recommended that Fahlen keep his privileges, Sutter followed through with his termination in January, the lawsuit says. Fahlen is now chairman of the department of medicine at Doctors Medical Center in Modesto.

A spokesman for Sutter's Central Valley region said the group had not seen the lawsuit and would not comment.

The California Medical Board in 2007 accused Safari of gross negligence in the deaths of two newborns in Fresno.

But a state administrative law judge found in 2009 that Safari complied with standards of care and was not at fault.

Despite that decision, Kaiser has not allowed Safari to practice medicine at its hospitals, the lawsuit alleges.

Federal regulators also investigated complaints by Kaiser medical staff and nurses who had raised questions about the Fresno physician's competence.

Officials issued a critical report in 2008 suggesting that the deaths could have been prevented if Kaiser had more closely monitored Safari.

Sunday, November 6, 2011

National Toothache: U.S.’s Fifth World Health Care

National Toothache: U.S.’s Fifth World Health Care
by Grady Miller
Canyon News
Nov 6, 2011

HOLLYWOOD—According to a recent Kaiser Family Foundation poll, fully one-third of Americans are skipping dental care because of the high cost. As the Times reported this week, doctors are seeing people who haven’t visited a dentist since Clinton was president, and they are enduring toothaches for years.

I know the dental neglect score, because I toughed out a painful abscessed molar for much of a decade. When the good Dr. Fundaminsky extracted it, I felt sudden relief and also learned about the grave dangers posed by infected teeth: it’s not just the pain. Because all the blood flows through the gums on its voyage throughout the body, infected teeth can lead to organ damage and even death, when left untreated.

Hearing of those poor who have deprived themselves of medical care, I recall my own long healing process when my eyes slowly opened and I overcame a deeply ingrained aversion to seeking the proper care — an insane aversion reinforced by the grin-and-bear-it brand of American stoicism, a usually admirable trait that is in the medical context deplorable. In fact, as someone who suffered M.A.S. (Medical Avoidance Syndrome - my coinage), I believe it poses a major public health problem.

From 1992 to 2001, I resided in a Third World country and during that time I discovered how deprived I had been, handicapped by my American notions of health care and a peculiarly American dread of going to the doctor. While in my new country of residence, Mexico, I was insured by I.M.S.S. (the Mexican Social Security Institute), even as a foreigner. As an American, I didn’t have the foggiest concept of what this meant or know how to take advantage of this benefit until it was too late for my molar, so indoctrinated had I been by the United States’ dysfunctional health care system.

In Mexico, the government-run system of health care and hospitals, established in 1943 under President Avila Camacho, is open to most Mexican workers and other individuals who pay a yearly fee (around $100) based on a full-time minimum wage. A good six years passed before I knew enough to get some antibiotics from I.M.S.S. to alleviate an ear infection.

For me, the real mind-opener was simply living for the first time in a country where medical care is widely available without costing an arm and two legs, a country where the dictates of common medical sense reigned. I lived in a country where alarmed friends and co-workers would urge a visit to the doctor when symptoms of a dermatological malady had conspicuously crossed the line of my stoic American tolerance for an ailment without seeing a doctor. (It turned out to be shingles.) In Mexico, my whole fearful outlook toward medicine changed: if I had a complaint or just plain curiosity about a change observed in my body, for $20 or $30, I could do something about it. At the end of such visits, I would usually be granted a generous dose of the great cure-all, the peace of mind that comes from knowledge.

An underclass of many, far too many, Americans have been infected with the pernicious idea of monetized health care. The land of plenty has spawned a destructive culture of self-sacrifice. We shun the dentist because it may be costly and the toothache will eventually subside. Likewise, a host of other medical issues and routine check-ups are postponed for a payday that never comes for the unemployed and the working poor. An embarrassing number of Americans steel themselves to ignore the body’s warning signs and deny themselves necessary care. With the recession, the trend is even more prevalent. Another Kaiser Family Foundation survey last year revealed that one in three Americans reported problems in paying medical bills, and almost half reported somebody in their family skipping pills and postponing medical treatment because of the cost. Hey, you wouldn’t put off an oil change on your car, would you? It is a pathetic commentary on our culture that we take better care of our cars than our bodies.

As for my infected molar, let me be truthful. I avoided the dentist for years in both Mexico and California. In addition to having the Scottish allergy to untoward expenses, I share the common human trait of dreading and hating the dentist. My dumb.

The Doctors Who Killed a President

The Doctors Who Killed a President
September 30, 2011

For 11 weeks Garfield endured unsterilized probings, large doses of quinine and a vermin-infested sickroom.

A Tale of Madness, Medicine,and the Murder of a President
By Candice Millard

A near drowning while he labored on the Erie and Ohio Canal convinced him that God “had saved me for my mother and for something greater and better than canalling,” he wrote. For the next few years, he worked his way up through local schools and Williams College; at the Western Reserve Eclectic Institute (now Hiram College), a preparatory school, he mastered his studies so thoroughly that he was promoted from janitor to assistant professor. Returning there to teach, he became the school’s president at 26. In his spare time, he passed the Ohio bar.

Excelling both in combat and as a top staff officer, he rose to the rank of major general during the Civil War but was sickened by the carnage of battle. “Garfield would later tell a friend,” Millard writes, “that ‘something went out of him . . . that never came back; the sense of the sacredness of life and the impossibility of destroying it.’ ”

Elected to Congress in 1862, Garfield fought for black rights and liberty, writing in his pocket diary, “Servitium esto damnatum”— “slavery be damned.” Modest to a fault, he toiled diligently in the legislative vineyards for 17 years...

Had Garfield been left where he lay, he might well have survived; the bullet failed to hit his spine or penetrate any vital organs. Instead, he was given over to the care of doctors, who basically tortured him to death over the next 11 weeks. Two of them repeatedly probed his wound with their unsterilized fingers and instruments before having him carted back to the White House on a hay-and-horsehair mattress.

There, control of the president was seized by a quack with the incredible name of Dr. Doctor Willard Bliss. Dr. Doctor Bliss insisted on stuffing Garfield with heavy meals and alcohol, which brought on protracted waves of vomiting. He and his assistants went on probing the wound several times a day, causing infections that burrowed enormous tunnels of pus throughout the president’s body.

Garfield’s medical “care” is one of the most fascinating, if appalling, parts of Millard’s narrative. Joseph Lister had been demonstrating for years how his theories on the prevention of infection could save lives and limbs, but American doctors largely ignored his advice, not wanting to “go to all the trouble” of washing hands and instruments, Millard writes, enamored of the macho trappings of their profession, the pus and blood and what they referred to fondly as the “good old surgical stink” of the operating room.

Further undermining the president’s recovery was his sickroom in the White House — then a rotting, vermin-ridden structure with broken sewage pipes. Outside, Washington was a pestilential stink hole; besides the first lady, four White House servants and Guiteau himself had contracted malaria. Hoping to save Garfield from the same, Bliss fed him large doses of quinine, causing more intestinal cramping...

Thursday, November 3, 2011

GlaxoSmithKline to pay $3B to settle charges over marketing practices

GlaxoSmithKline to pay $3B to settle charges over marketing practices

GlaxoSmithKline agreed to pay $3 billion to resolve U.S. criminal and civil investigations into whether the U.K. company marketed drugs for unapproved uses and other matters, its biggest legal settlement.

Negotiations over the terms are ongoing and will be completed next year, the London-based company said in a statement today. The cost is covered by existing legal provisions and will be paid from the company’s cash resources, Glaxo said.

The Glaxo settlement would trump the $2.3 billion Pfizer paid in 2009 over the marketing of its Bextra painkiller and other drugs and the $1.4 billion Eli Lilly paid the same year over sales of its Zyprexa anti-psychotic medicine. The Bextra accord had been the largest pharmaceutical marketing settlement in U.S. history.

Glaxo to pay $3B to settle U.S. sales, Avandia cases
By Phil Serafino and Makiko Kitamura
November 3, 2011

GlaxoSmithKline Plc agreed to pay $3 billion to resolve U.S. criminal and civil investigations into whether the U.K. company marketed drugs for unapproved uses and other matters, its biggest legal settlement.

Negotiations over the terms are ongoing and will be completed next year, the London-based company said in a statement today. The cost is covered by existing legal provisions and will be paid from the company’s cash resources, Glaxo said.

The potential settlement brings Glaxo closer to putting years of legal probes behind it. The company set aside 2.2 billion pounds ($3.5 billion) in the fourth quarter last year in anticipation of reaching an agreement on the cases. Glaxo said it will have about 1 billion pounds of its 2.9 billion pounds in total legal provisions remaining after today’s settlement is completed, and it hasn’t decided what to do with the money.

“This news essentially draws a line under a 10-year legal saga,” Gbola Amusa, an analyst at UBS AG in London who recommends buying Glaxo shares, said in an e-mail. “This removes significant uncertainty on ongoing legal issues.”

Glaxo were unchanged at 1,355.5 pence at 10:14 a.m. London time.

Pfizer Settlement

The Glaxo settlement would trump the $2.3 billion Pfizer Inc. paid in 2009 over the marketing of its Bextra painkiller and other drugs and the $1.4 billion Eli Lilly & Co. paid the same year over sales of its Zyprexa anti-psychotic medicine. The Bextra accord had been the largest pharmaceutical marketing settlement in U.S. history.

Abbott Laboratories agreed to pay at least $1.3 billion to settle claims by the U.S. government and 24 states alleging the company illegally marketed its Depakote epilepsy drug, people familiar with the accords said last month.

“Litigation is an ever-present business risk in the pharmaceuticals industry,” Mark Purcell, a Barclays Capital analyst, wrote in a note to investors today. Barclays expects Glaxo will incur legal charges of 150 million pounds a year, Purcell said.

Federal prosecutors began an investigation in Colorado in 2004, later taken over by the U.S. attorney in Massachusetts, into whether Glaxo promoted drugs for unapproved uses, and into ways Glaxo potentially influenced doctors. The probe concerns nine of the company’s best-selling products from 1997 to 2004, including the Advair lung treatment, Glaxo said in its annual report.

Medicaid Rebates

Today’s settlement also covers a U.S. Justice Department probe of Glaxo and a Medicaid rebate program, and a Justice Department investigation into the development and marketing of the Avandia diabetes drug, the company said.

Drugmakers are required to give rebates to Medicaid, the government health insurance program for the poor. The investigation examined how Glaxo reported prices charged to other payers, which are used in calculating the Medicaid rebates.

Regulators said last year that Avandia would be withdrawn from the market in Europe and sales would be limited in the U.S. because of an increased risk of heart attacks.

“This is a significant step toward resolving difficult, longstanding matters which do not reflect the company that we are today,” Chief Executive Officer Andrew Witty said in the statement. “In recent years, we have fundamentally changed our procedures for compliance, marketing and selling in the U.S. to ensure that we operate with high standards of integrity.”

Compensation Changes

Earlier this year, Glaxo changed incentive compensation programs for U.S. sales representatives. The company has eliminated the link between sales goals and bonuses, which are now based on selling competency, customer evaluations and overall performance of the representative’s business unit.

Glaxo still faces probes involving the United Nations oil- for-food program, and HIV product sales and marketing in the U.S., JPMorgan Chase & Co. analysts wrote in a note to investors today.

The legal provision, announced in January, led to a loss for Glaxo in the fourth quarter of 2010. Less than three weeks after the provision was disclosed, the company said it would begin a share repurchase for the first time since 2008 to enhance investor returns.