June 4, 2009

Prime Healthcare Services Expresses Interest in San Leandro Hospital

In a letter dated May 29, 2009, Prime Healthcare Services has expressed an interest in leasing and operating San Leandro Hospital.

The proposal states that Prime Healthcare would hire most of the employees of the San Leandro Hospital and "assume the existing Collective Bargaining Agreements."

But is Prime Healthcare the type of company that Sutter Health critics want?

Prime Healthcare is run by Prem Reddy, a cardiologist and healthcare entrepreneur. Prime Healthcare was started by Reddy as Desert Valley Medical Group in 1985. It has since acquired 13 hospitals, mostly located in Southern California.

According to published reports, Prime Healthcare has developed a reputation for taking over hospitals that were losing money and turning them around. However, its business practices have attracted the attention of the California Department of Managed Health Care, which filed a lawsuit in July 2008 to stop Prime Healthcare from a practice known as balance billing. According to a press release, the Knox-Keene Act "prohibits Prime’s practices, where the consumer is billed for emergency services which are the responsibility of the health plans." California DMHC Director Cindy Ehnes described Prime Healthcare as a "serial balance biller whose actions have unjustly threatened the credit rating of thousands of Californians.

A July 2007 article in the Los Angeles Times states, " When Reddy's company, Prime Healthcare Services Inc., takes over a hospital, it typically cancels insurance contracts, allowing the hospital to collect steeply higher reimbursements. It has suspended services -- such as chemotherapy treatments, mental health care and birthing centers -- that patients need but aren't lucrative."

Posted by Mike Katz-Lacabe at June 4, 2009 6:47 PM | TrackBack
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