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Feds Deny Medicare Funds to South Beach Hospital

Posted on: Saturday, 11 March 2006, 06:00 CST

By John Dorschner, The Miami Herald

Mar. 11--Federal authorities Friday banned the bankrupt and closed South Beach Community Hospital from receiving Medicare funds for the next five years.

"South Beach has committed repeated and flagrant violations of its obligations," said Inspector General Daniel R. Levinson of the Department of Health and Human Services, which oversees the Medicare program.

Modern Healthcare, a trade publication, said the regulators' move was the first time in the country that a hospital had been cut off from Medicare payments because it had failed to fulfill a contract promising performance improvement. And it was only the second time nationally that a hospital had been refused federal healthcare funds for any reason.

South Beach's attorney, John Schwartz, said, "It's our impression that the OIG [Office of the Inspector General] was looking for a poster child to send a strong message to the hospital industry that hospitals that fail to comply will be punished. But historically the OIG has been reluctant to kill a hospital because it denies services to a community.

"In this case, they shot a hospital that's already dead," Schwartz said. He said he didn't know if the owners would appeal the Medicare exclusion or leave it to new owners to work out the facility's relationship with the federal program.

The hospital last month sent away its last eight patients and filed for bankruptcy. A new corporation has applied to the state to take over the hospital, formerly known as South Shore, and the present owners say they want to sell.

In December, Medicare officials notified the hospital it was in violation of its corporate integrity agreement, which it had signed to settle claims it had improperly billed Medicare.

South Beach informed federal officials it would correct the problems by Feb. 28, but the OIG said it hadn't.

"This exclusion sends a clear message to the provider community that the OIG will not hesitate to pursue an action against those providers that fail to abide by their integrity agreement obligations," Levinson said in a prepared statement.

A group connected to Crescent Heights, owner of the land and buildings at the South Beach site, has asked the state to transfer to it the hospital operating license that is currently held by a group led by Ira Barton and William Zubkoff.

Rumors have circulated among South Beach's former employees that Mercy Hospital was also interested in obtaining the license, but Friday afternoon Manuel P. Anton, Mercy's senior vice president, said, "Mercy currently doesn't have any plans to pursue the South Shore license."

Since the for-profit Crescent Heights made its purchase of the nonprofit facility in 2004 for about $35 million, rumors have swirled that the developer's main interest was in using the well situated property -- in Miami Beach, at Fifth Street and Biscayne Bay -- to build condos or commercial space. Crescent Heights denied that speculation at the time.

Because the elderly make up such a large percentage of hospital admissions, withdrawal of Medicare funding is generally considered a death knell for a facility.

On Friday afternoon, laid off employees gathered at the closed hospital because they had been told they would receive their last paychecks at that time.

"I'm supposed to get a check, but now they say there is nothing until the [bankruptcy] court acts," said Claudia Guzman, a former mental health technician.

Schwartz said the hospital planned to ask the bankruptcy judge for permission to pay employees.

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Copyright (c) 2006, The Miami Herald

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Source: The Miami Herald

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