South Dakota Lawsuit Alleges Money Improperly Motivated Physician-Owned Hospital

162017_132140396847214_292624_nA recently filed lawsuit by the former CEO of a physician-owned South Dakota hospital alleges what many people firmly believe about physician-owned hospitals: money motivates medical decisions, even if the decisions are not in the best interests of patients.

The South Dakota lawsuit filed by the CEO of the hospital from 2003 to 2013 alleges that she was fired after she complained about harassment she suffered from a surgeon who was an owner of the for-profit, physician-owned hospital and was responsible for generating a significant portion of the profits earned by all of the owners of the hospital.

The former CEO and others allegedly complained to the hospital board — the physician-owners of the hospital — regarding the surgeon’s alleged harassment but the board allegedly failed to act on the harassment allegations because the surgeon was responsible for generating revenue (profits) that would be loss if the surgeon was disciplined and the number of surgeries he performed at the hospital declined.

The surgeon and the hospital are defendants in four pending South Dakota medical malpractice cases. The former CEO alleges in her lawsuit that the surgeon performed lucrative but not medically necessary or indicated spinal surgeries at the hospital. A South Dakota jury reportedly had awarded $933,000 in November 2013 to the family of a woman who died after repeated spinal surgeries at the hospital, finding that the surgeries were unnecessary.

A former nurse at the hospital reportedly signed a sworn affidavit that has been filed in the medical malpractice cases filed against the surgeon and the hospital in which she stated, “It was common knowledge at [the hospital] and discussed by the staff that complaining about [the surgeon] would do no good because he was untouchable due to the amount of money [the surgeon] brought into [the hospital]” and cited an incident when the surgeon allegedly threw items at a male staff member because the surgeon was jealous over a female surgical device representative.

The surgeon’s relationship with the hospital was terminated in March 2012 after the surgeon lost his privilege to practice medicine at another hospital, resulting in “significant decrease in revenues that had been generated by [the surgeon], thereby significantly reducing, if not eliminating, the quarterly distributions that defendant’s owners had been receiving while [the surgeon] was a privileged provider and part owner of the defendant.”

The surgeon is not presently licensed in South Dakota and spends time in his native Iran.

Critics of physician-owned hospitals allege that there is an inherent conflict because the owner-physicians admit patients into the hospital in which they have an ownership/financial interest — the more patients that are admitted, the more the hospital bills for services, the more the hospital is paid, and the more the physician-owners receive as a result of their ownership interest in the hospital. Despite protestations from the owner-physicians that their medical decisions are not based on monetary considerations, there is no getting around the fact that the doctors put money in their own pockets each time a patient is admitted into their hospital — the more patients admitted, the more they profit.

The Affordable Care Act bans any new physician-owned hospitals from participating in federal health care programs but expressly grandfathers physician-owned hospitals that were in existence before December 31, 2010.


If you or someone you know may have been injured (or worse) by medical malpractice in South Dakota, you should promptly consult with a South Dakota medical malpractice attorney who may investigate your medical negligence claim for you and represent you in a medical malpractice case, if appropriate.

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This entry was posted on Tuesday, June 10th, 2014 at 7:28 am. Both comments and pings are currently closed.


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