Accession Number : ADA137516

Title :   Hospital Merger Increased Medicare and Medicaid Payments for Capital Costs.


Full Text :

Report Date : 22 Dec 1983

Pagination or Media Count : 109

Abstract : In 1981, the Hospital Corporation of America (HCA) acquired the assets (54 hospitals, 18 nursing homes, and other subsidiaries) of Hospital Affiliates International, Inc., from INA Corporation. INA received $425 million in cash and 5.39 million shares of HCA stock valued at $190 million. In addition, HCA assumed long-term debt of about $270 million. During the first year after the acquisition, the overall costs of the acquired hospitals increased because of the acquisition by a net amount of about $55 million attributable to changes in interest, depreciation, and home office expenses. A portion of the increased costs was allocated to the Medicare and Medicaid programs. In accounting for cost items associated with the acquisition, HCA used a number of methods that GAO questions under Medicare reimbursement principles (which are also generally used by Medicaid). These methods generally increased the amount claimed for reimbursement under Medicare and Medicaid.

Descriptors :   *Hospitals , *Accounting , Costs , Medical services , Acquisition

Subject Categories : Administration and Management
      Medicine and Medical Research
      Medical Facilities, Equipment and Supplies

Distribution Statement : APPROVED FOR PUBLIC RELEASE