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This scandal is particularly notable given it has come right at the heels of a New York Times story which reported that hospitals often profit from surgical errors, though in this criminal case, it was deliberate rather than unintentional errors.
Tracheostomy is typically performed whenever a patient is on a breathing machine for a prolonged period of time and there is a low likelihood of recovery.
However, prior to tracheostomy consideration, sedation is turned off so that the patient is allowed to wake up and try to breath on their own. If able to breath on their own with machine assistance, the breathing tube may be removed thereby avoiding a tracheostomy.
However, according to the lawsuit, the hospital and physician colluded to over-sedate patients thereby ensuring the patient is "ventilator-dependent" for which a tracheostomy is (erroneously) "justified".
Furthermore, patients who have undergone tracheostomy were intentionally made to stay in the hospital longer than required ("28 days") in order to earn as much money as possible in insurance reimbursements for the hospital. [link: paragraphs 123-142]
According to media reports, this scam has so far involved 28 patients... 5 who ultimately died within 2 weeks. The most recent unnecessary tracheostomy was performed on March 1, 2013.
Because of the trach and subsequent prolonged hospitalizations, the hospital received up to $160,000 for each patient from Medicare and Medicaid.
There's more... there was a massive kickback scheme whereby the hospital paid doctors to refer cases to the hospital (clear violation of Stark Laws), doctors ordered unnecessary ER visits, and fraudulently referred patients to nursing homes and ambulance services which the hospital had a relationship with.
This awful scam was brought to light by hospital workers (administrators, physicians, and nurses) who secretly worked with the FBI and other federal investigators.
Feds raid Sacred Heart Hospital, arrest owner and doctors. Chicago Sun-Times 4/16/13.
United States of America Criminal Case Record. 4/15/13
Hospitals Profit From Surgical Errors, Study Finds. New York Times 4/16/13
Relationship Between Occurrence of Surgical Complications and Hospital Finances. JAMA. 2013;309(15):1599-1606. doi:10.1001/jama.2013.2773.