Why all the back surgeries at a hospital in Hawaiian Gardens?

When considering a serious spinal operation, you probably wouldn't think of Tri-City Regional Medical Center as the place to go. But this small facility has been doing a boffo business, especially for workers' compensation patients. It billed insurers $65 million in 2010, largely thanks to Paul Richard Randall, who was a consultant for Tri-City and has been paid millions of dollars in marketing fees, the WSJ reports. He both recruited surgeons to the hospital and supplied metal implants for the surgeries through distributorships he owned. Nice.

The U.S. attorney in Los Angeles has investigated Mr. Randall's practices. By last August, federal prosecutors had prepared a charge that, if filed in court, would accuse him of conspiring to inflate the cost of spinal-surgery hardware and use part of the proceeds to pay kickbacks to doctors to refer workers' compensation patients for surgeries at Tri-City, according to a copy of the charge reviewed by The Wall Street Journal. Mr. Randall said he is just one of a dozen spinal-implant distributors in the Los Angeles area who mark up the price of the surgical hardware they provide to hospitals, and "there's nothing illegal about what I'm doing, my lawyer tells me." As for the kickback allegation, "that's not true," Mr. Randall said.

A Tri-City official told the paper that the hospital ended its relationship with Randall in the middle of last year, a few months after it ousted the executive who had hired him.

Tri-City, a 107-bed facility just south of Los Angeles near Long Beach, illustrates a U.S. health-care trend, the increasing total bill for back surgery, that the Journal has traced in articles over the past 15 months. In California, this trend shows up in the workers' compensation system. California employers paid $7.1 billion in insurance premiums to cover their workers' compensation liability in 2010. Spinal-fusion surgery is a growing part of the care these premiums pay for. It accounted for 40% of inpatient hospital charges to the state workers' compensation system in 2010, up from 30% in 2001, a Journal analysis of hospital discharge data shows.