You may be paying for corruption

Ex-state health board member is alleged to have taken kickbacks

Sunday, May 15, 2005

By Alice Hohl

Staff writer

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A mom sits in an Emergency Room cradling her little girl, who's bawling and feverish with a mysterious sudden ailment.

Unless Stuart Levine is the name of the doctor who can cure her baby, she likely doesn't care a whit who Levine is. Neither does the elderly stroke victim, the heart attack patient, the man who fell off a ladder, the teenager in the car crash.

But when the medical bills arrive, they may feel the impact of what Levine and his cronies are said to have done.

The political money man and powerbroker from Highland Park, brought up on federal charges last week, is accused of manipulating the decisions of an obscure state panel that regulates hospital and health facility construction.

Levine did this, the U.S. attorney alleges, to secure kickbacks from hospitals to line his friends' pockets with millions of dollars.

The public paid little attention to the workings of the Illinois Health Facilities Planning Board — until recently, when plans for the first new hospital construction projects in more than two decades were hotly debated before the board.

Then this scandal came to light.

So why should anyone else take special notice of this rich, politically connected guy accused of corruption, particularly Illinois' health care consumers?

Because we may be paying for it.

When hospitals spend, you pay

From its unwieldy name to its complicated formulas, the Illinois Health Facilities Planning Board does not inspire much curiosity in the average Illinoisan.

This board oversees a process that prohibits hospitals, dialysis centers and doctors' offices from building new facilities unless they prove a need for them. Although some in the health-care industry disagree with this procedure — called Certificate of Need — its ultimate goal is to lower costs for everyone.

Federal prosecutors maintain Levine used his position on the board to enrich himself.

He threatened to use his power to force a Naperville hospital to steer $113 million in contracts to a friend, according to the 28-count indictment, and he siphoned millions of dollars out of other hospital and medical school construction projects as part of a scheme to obtain $9.5 million for himself and associates.

When money is wasted — either on needless new facilities, unnecessary consulting fees, bribes or kickbacks — the cost ultimately draws money from the pockets of consumers, according to Jim Unland, an analyst and expert on Illinois' health care industry.

"Hospitals get their money from being reimbursed (by insurance, government or patients). And if ... they're spending money either illegally or improperly, then that has the result of raising costs," Unland said.

If you think the rising price of gas is pinching your pocketbook, consider medical care.

Gasoline in the Chicago area cost 1.5 times more in 2004 than in 1994, per the consumer price index. In the same period, the price index for medical care started out more than twice as high as that of gas — and rose more dramatically, according to the U.S. Department of Labor.

Nationally, the cost of providing health-care benefits to employees has shot up 66 percent in the past decade, according to the Labor Department.

Even people with good health insurance, who don't have to worry about the cost of individual medical procedures, feel the yearly rise in insurance premiums. Often, the hikes cancel out their salary increases.

Looking into past hospital deals

When hospital companies come before the planning board, they make elaborate presentations, taking into account existing facilities, scope of services, population growth and financial projections.

Finding people who know enough about the health-care industry to make informed decisions is difficult, said David Morrison, deputy director of Illinois Campaign for Political Reform, a government watchdog group.

"These are fairly complicated decisions. You can't have just anyone saying, 'Let's put the hospital in this city and not that one,' " Morrison said.

Often, government must rely on "insiders."

Levine — a lawyer, lobbyist and investor in the health care industry — was an insider's insider.

Founder and original shareholder of HMO America until it merged with another company in a $400 million deal, he was appointed to the board in 1996 by George Ryan. He was reappointed when Rod Blagojevich became governor. A hob-nobber among the state's political elite, he's made $1.6 million in campaign contributions.

"Government agencies want people with private sector experience who know the field and know how it works," Morrison said. "The problem is when you get individuals who seek to abuse that for their own profit. The allegations are that Stuart Levine did just that."

Morrison said it would help if the public paid more attention to obscure state boards, but having "good people" serving in government is key.

"The press is great and sunshine a wonderful disinfectant, but there's no better way to have good government than to have good public officials," he said.

Randall Samborn, spokesman for the U.S. attorney's office, said if Levine is convicted he must pay back the money he is charged with siphoning from North Chicago's Chicago Medical School and its foundation — pegged at $6 million.

Samborn said the kickbacks from the hospital project named in the indictment hadn't been realized yet because construction of a new hospital in northwest suburban Crystal Lake never started.

Mercy Health Systems' Crystal Lake project was halted by a judge who ruled that its permit was issued as a result of "capricious" decision-making.

Consequently, no money will be repaid to hospitals because of this indictment, Samborn said, but the investigation hasn't ended.

Presumably, the government is looking at other projects considered by the board.

New leader a stickler for ethics

The new Health Facilities Planning Board is headed by former congressman Glenn Poshard. Unland said he is confident it harbors none of the corruption alleged to have run rampant among the old board members.

Many of the paid staff of the Illinois Department of Public Health, who review and rate the applications for new medical facilities, are the same as under the old board.

Poshard has taken great pains, though, to uphold ethics regulations and never to discuss board business outside of public meetings.

During deliberations for Advocate Health Care's Orland-Tinley hospital proposal earlier this month, Poshard clearly explained how the formulas guide board decisions. He also reminded colleagues they were free to cast their own votes, even if contrary to his own and against recommendations from the board's staff.

This contrasts with Levine's time on the board, where whispered conversations preceded changed votes and the board often ignored the staff reports about projects.

A long process

Peter Murphy, CEO of St. James Hospitals and Health Centers in Olympia Fields and Chicago Heights, said the criminal investigation highlights the purpose and importance of this often-ignored state board.

"As hospitals are proposed for Orland Park or Tinley Park, it's not as simple as saying, 'I want a hospital five minutes away.'

"What does it do for other hospitals in other regions that are close by but not as privileged economically? How does it impact the overall system of care in the region? The board looks at all that — not in a vacuum," Murphy said.

Murphy said many years pass between planning board approval and project construction. For example, St. James Hospital in Olympia Fields first applied for its large expansion project in 2000. It will be completed early next year.

Although such an extended timeline, combined with complex health care economics, make the issues difficult to follow for the average consumer, Murphy said the board's decisions are critical for Southland communities that rely on hospitals as economic engines and major employers.

"In the American culture there's a desire for immediate gratification and to have all things for all people with great ease," he said, and that's not always possible without bankrupting hospitals that serve many poor people and depend on a percentage of paying customers to make up their losses.

"Certificate of Need helps to preserve that kind of balance," Murphy said.

Some not willing to 'play the game'

David Dranove, a Northwestern University professor, however, believes this scandal proves the Certificate of Need process has done more harm than good.

"The whole purpose of Certificate of Need is that market forces could never get this right, and we had to leave it to 'regulators,' " said Dranove, also a consultant on Edward Hospital's proposal to build a hospital in Plainfield.

"One nice thing about market forces is ultimately you have to provide something that's of value to succeed," he said. "With Certificate of Need — the way it was allegedly working — market forces didn't matter. You just had to know the right person and give them the right amount of money."

Dranove said he thinks of all the communities, like Plainfield, Orland and Tinley, denied a new hospital — perhaps because they weren't willing to "play the game." Edward Hospital officials declined to make payoffs and helped the FBI in its investigation of Levine and the board.

Meanwhile, approval for a new hospital went to Crystal Lake because Mercy Health Systems promised to do business with Levine's friends.

The consumers pay for this corruption, Dranove said.

"Ultimately of course it's our money," he said. "Whether it's a hospital or other business, they get their money from what they sell to us."