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HRD-84-10 1 (1983-12-22)

handle is hein.gao/gaobabejl0001 and id is 1 raw text is: I J _j 1 BY THE COMPTROLLER GENERAL Report To The Honorable Willis D. Gradison, Jr. House Of Representatives OF THE UNITED STATES Hospital Merger Increased Medicare And Medicaid Payments For Capital Costs In 1981, the Hospital Corporation of Amer- ica (HCA) acquired the assets (54 hospitals, 18 nursing homes, and other subsidiaries) of Hospital Affiliates International, Inc, from INA Corporation INA received $425 million in cash and 5 39 million shares of HCA stock valued at $190 million In addi- tion, HCA assumed long-term debt of about $270 million During the first year after the acquisition, the overall costs of the acquired hospitals increased because of the acquisition by a net amount of about $55 million attributable to changes in interest, depreciation, and home office expenses A portion of the increased costs was allocated to the Medi- core and Medicaid programs In accounting for cost items associated with the acquisition, HCA used a number of methods that GAO questions under Medi- care reimbursement principles (which are also generally used by Medicaid) These methods generally increased the amount claimed for reimbursement under Medicare and Medicaid \, ,t) I, U11Ill i'l iil OffI Il'if' 123243 , GAO/HRD-84-10 DECEMBER 22, 1983

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