Healthcare News & Insights

Avoid this hospital’s $1M mistake with your vendors

When you’re making improvements to your hospital, it’s crucial to carefully vet vendors, whether they’re IT companies or equipment providers. One Texas hospital didn’t. The result: a huge hassle and over a $1 million loss.

186987572Dallas Medical Center was looking to upgrade its MRI machines. According to an article in the Kansas City Business Journal, the hospital was in talks with Cerner, a supplier of healthcare IT devices and hardware based in Kansas. The facility wanted to purchase a high-tech MRI that would help the hospital better diagnose heart issues in patients.

Originally, Cerner gave the hospital a price quote for the MRI in partnership with iHeart, a company owned by Albert Davis. However, Cerner eventually pulled out of the deal, but Davis never told the hospital.

Instead, Davis and several co-conspirators created an elaborate ruse to trick Dallas Medical Center and its parent company, Prime Healthcare Services Inc. into going forward with the purchase.

The scammers made their own fraudulent business entity to impersonate Cerner, even going as far as creating a separate Internet domain with fake employee email addresses and opening a separate bank account. They even activated cell phones with numbers that had the same area code as Cerner.

At least initially, the effort fooled the hospital – Dallas Medical Center wired over $1 million to the phony bank account, thinking it was purchasing an MRI from the vendor. But Davis’ scheme fell apart when the hospital, frustrated at not receiving a definite timeline for installing the equipment, called Cerner directly.

Cerner had no records of a sale on file and quickly realized the invoices received by the hospital were fraudulent. The company contacted the hospital and then notified authorities.

Davis has been charged in federal court for his role in orchestrating the scheme.

Vigilance stops fraud

This shows how important it is for hospitals to double check every aspect of any business deal or contract with a vendor. Make sure every person involved in big purchasing decisions thoroughly researches any new vendor or business associate before signing on the dotted line.

Taking the extra time to ensure every “i” is dotted and all the “ts” are crossed can help keep your facility from suffering the same fate as Dallas Medical Center. Although fraud of this nature is rare, smaller items that can still cost hospitals thousands of dollars may fall through the cracks if business contracts aren’t closely scrutinized.

It’s also crucial to make sure your business associates and vendors are credible and trustworthy because your facility will be on the hook for their unscrupulous behavior in other areas, including keeping patients’ protected health information confidential.

 

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