Suit: Quorum hid hospital losses to keep management contract

Hospital chain Community Health Systems has a bit of trouble on its hands. A subsidiary, Brentwood, Tenn.-based Quorum Health Resources, has been sued by a hospital claiming that it "cooked the books" to keep a lucrative management contract.

Natchez (Miss.) Regional Medical Center has accused Quorum, which ran the hospital on contract, of pretending to turn the hospital around by manipulating the numbers. Until the end of 2008, Quorum had been getting an annual $200,000 fee, plus reimbursement for salaries and benefits for the CEO and CFO.

Among other allegations, Natchez Regional is claiming that Quorum bought supplies from partners at higher prices than it might have gotten elsewhere. Perhaps more importantly, Natchez Regional says that Quorum managers materially understated losses, and kept doing so even after a September, 2007 year-end audit found losses rather than profits.

Natchez is asking for at least $46 million, plus punitive damages.

To find out more about the suit:
- read this article from The Tennessean

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