ABOUT THE AUTHOR
Chris Riedel has spent the past 40 years in the healthcare industry, and more recently, as one of the leading healthcare fraud fighters. He founded and served as the CEO of five health care companies: Hunter Heart, Hunter Laboratories, Meris Laboratories (NASDAQ: MERS), MicroScan, and Micro Media systems. In May of 1992, Meris was ranked by Business Week as the 40th best small company in America.
He also has served as a Managing Director for Providence Capital, a boutique New York investment bank, as the Chairman of Chi Laboratory Systems, the pre-eminent hospital and commercial laboratory consulting firm in the U.S., and as a member of the Board of Directors of Boston Heart Lab. Currently, is he is member of Business Executives for National Security (BENS).
For the past decade, Mr. Riedel has concentrated his efforts on fraud fighting against medical labs that are defrauding American taxpayers and the medical industry — the subject of Blood Money. One of his proudest accomplishments came when he received the Taxpayers Against Fraud Whistleblower of the Year Award in 2011 for assisting in the recovery of $286 million from Quest and LabCorp, which he undertook on behalf of California taxpayers. Another accomplishment was developing and receiving FDA new drug approval for a more precise way to identify bacteria causing disease, and which antibiotics and dosage will be most effective in treatment — a product that has saved many lives around the world.
A longtime resident of Silicon Valley, Mr. Riedel makes his home there with his wife, Marcia, and four sons, for whom he served as a soccer and basketball coach for years. He enjoys international travel and is an avid Bay Area sports fan.
SAMPLE CHAPTER ONE: BACK AGAINST THE WALL
I sat by my soothing backyard waterfall on a beautiful fall day in Silicon Valley, agonizing over a decision that could lead to one of two outcomes, neither desirable: committing Medicare fraud, or dealing with personal and corporate bankruptcy. Either would change my life. I found myself with no business path forward, my back to the wall — and danger lurking just ahead.
Members of my Hunter Labs sales staff had approached me, concerned for the company and their own livelihoods. “Chris, doctors want to use our lab tests; they hate Quest and LabCorp services,” a member of our sales team said. “But, we have to match their discounted prices…”
How? I thought. Our prices for patients were approximately 20% below those of the Blood Brothers. And, our list client prices billed to physicians were a bit less than the Brothers. However, the Brothers offered deeply discounted, below cost prices to physicians and clinics.
Due to our high fixed overhead at Hunter Labs, we had not yet generated the volume to be profitable. Our buildout was solid: we invested in the best instrumentation and automation available to process up to $50 million in annual revenue. We also found built out Patient Service Centers, where patients could visit to have their blood drawn. Physicians would not send patients if they were not in the same complex as their office, or very close. These are a necessity in California, and generally require a traffic flow of 20 patients a day to sustain them. We were averaging about 15 per day, while more than 30 people walked through the Blood Brothers’ centers. If we closed down our centers, we would not be able to market to area physicians.
These were just two of the high fixed costs we faced. With no additional medical technologist staff, our highly automated lab could process 400 percent more chemistry, hematology and immunoassay tests — the bulk of laboratory testing. Still, I knew how the sentence would finish: “…and if we don’t match them, we’re not going to succeed.”
I knew this as I sat by the waterfall. I knew either of the two decisions in front of me would lead to bad outcomes: committing Medicare fraud, or probably bankruptcy.