ODYSSEY HEALTHCARE: A DEPARTMENT OF JUSTICE INVESTIGATION RELATED TO THE FALSE CLAIMS ACT

Journal of the International Academy for Case Studies, 2008 by Newbold, John, Sullivan, Laura

Toward the end of the article, the author highlighted the tension caused by the incursion of for-profit firms in a traditionally non-profit industry:

"In a business expanding as fast as the hospice industry and at a company expanding as quickly as Odyssey, growing pains are to be expected. Nonetheless, there is mounting concern within the industry that the quest to show profit growth and stock price gains can sometimes conflict sharply with the needs of dying patients and their families. Nonprofit hospices increasingly complain that they are shouldering a heavier burden than the for-profits - caring for a higher proportion of expensive-tocare-for patients and providing services that should be available at all hospices.

Says Dorothy Deremo, president and chief executive of Detroit-based Hospice of Michigan: 'For-profit organizations in health care have a different social contract: to deliver a return on investment and improve the equity of their stockholders. The social contract for the not-for-profit is... .to return value to our shareholders who are the patients, the families, and the community-at-large'".

Despite the intimations of the Barron's article, at the time of its publication, Odyssey was not under investigation by the U.S. Department of Health and Human Services' Inspector General's Office, the watchdog agency for the Centers for Medicare and Medicaid Services.

Odyssey's Operational Failure

Odyssey faced several significant organizational failures. Like many organizations that have faced rapid growth and the corresponding growing pains, Odyssey had focused its priority on growth. Odyssey's corporate documentation and training requirements had become secondary to the requirements of simply maintaining the day-to-day growth of the business. Unfortunately, this is a familiar story for many companies whose growth occurs rapidly and usually through acquisition. Odyssey had policies and procedures in place, but there was insufficient oversight to ensure that the established policies and procedures were followed.

In addition, during a period of rapid growth, many companies let training and employee development fall to the wayside. Odyssey was no exception. The lack of training and employee development was a major contributing factor to Odyssey's dilemma. Odyssey was growing exponentially, and due to resource limitations did not take the time to properly train or develop its employees.

Odyssey operates its business in a highly regulated industry. Record retention and internal reviews are an integral part of operating within government regulations. Odyssey was not aligned with the proper government agencies. In heavily regulated industries, companies often want to report errors immediately to the regulating agencies. The reason is simple: If the company reports the error, it illustrates to the regulatory agency that the company has control over its processes and regulatory requirements. Usually, in this scenario, the regulatory agency shows leniency on the reporting company.