NY hospital bid-rigging/fraud shines spotlight on contracting transparency

Two former New York-Presbyterian Hospital (NYPH) executives, two contractors and three corporations have been indicted by a New York City grand jury for participating in mail and wire fraud conspiracies related to more than $42 million in contracts for work performed at NYPH, reports the Wall Street Journal. These charges spring from a federal investigation into bid-rigging and fraud that has already resulted in similar indictments for a former purchasing official at Mount Sinai Medical Center and School of Medicine.

An NYPH spokeswoman described the hospital as an "unknowing victim of these alleged crimes." Many hospitals are at similar risk of becoming unknowing victims of contracting fraud. "Hospitals are involved in a lot of outsourcing. There is a tremendous opportunity for collusive behavior," Jack Fernandez, J.D, a partner at Washington, D.C.-based Zuckerman Spaeder LLP and leader of the firm's Health Care Fraud Practice, tells FierceHealthFinance. "Hospitals have to be on guard to ensure that their purchasing agents are playing straight."

Hospitals that have placed a single person in charge of the procurement process are likely at higher risk, he notes. "If there aren't good lines of communication between that person and, for example, the governing board of the hospital, it's a potential for collusive behavior."

A "really robust" compliance program plays a crucial role in keeping hospital contracting systems on point, advises Fernandez. Hospital executives "need to know what their purchasing agents are doing--and how they are doing it." A good way to get a handle on purchasing activities is to conduct routine, random audits of hospital contracts. Those audits should include an analysis of all the emails related to each contract, he adds.

To learn more:
- read this Wall Street Journal article
- read the DOJ press release
- visit the Zuckerman Spaeder website