Andrew Bain/Flickr
California hospital authorities pledged in recent weeks that they would thwart the growth of the Prime Healthcare hospital chain until they complete an investigation into infection-related billing rates.
Despite the state’s declaration, the chain has managed to add San Diego’s Alvarado Hospital to its roster that now includes 14 medical centers.
The turn of events has one Democratic assemblyman and a heavyweight labor union calling on the state to strip the hospital of its right to operate.
“I request that you … revoke Alvarado Hospital LLC’s existing license and take all measures available under the law to ensure that Prime Healthcare does not skirt the licensing requirements,” a Nov. 24 letter to the Department of Public Health from Assemblyman Marty Block says. “The Department should further deny any change of ownership license application by Prime until such time as all investigations are completed, and safe patient care is established.”
If any of this seems confusing, here’s the background.
Prime Healthcare owner Prem Reddy emerged as a controversial figure in California health circles several years ago. He began buying struggling hospitals, cutting up contracts with health insurers to free himself of pre-negotiated discounts. He charged what he wanted. Many people gave him credit for turning around the finances of struggling hospitals.
By several accounts, Reddy has softened his approach on that front.
However, California Watch reported several weeks ago that federal and state lawmakers are raising new questions about the chain, which operates mostly in Southern California. Those legislators are calling for investigations into billing rates for septicemia – an infection of the bloodstream.
Prime’s stand-out billing rates for the condition seemed to suggest that the company is perhaps overcharging the government or identifying an infection crisis, according to a July letter from Henry Waxman, D-Los Angeles, to the Health and Human Services Inspector General.
The inspector general’s office launched an investigation. The state attorney general’s office is undergoing a separate and unrelated probe.
And on Sept. 30, the Department of Public Health, which inspects hospitals and issues operating licenses in California, announced its own plan to review billing and infection-related records at Prime Healthcare facilities.
Prime Healthcare, for its part, has been very open in saying that it has an early detection and treatment policy related to septicemia. The company said the policy is one of many that sets it apart for top-quality care.
Public health authorities, though, followed the announcement of their probe with a Nov. 1 e-mail to a state lawmaker, saying that if Prime submits a “change of ownership” application to the state, “no decisions will be made until all investigations have been concluded.”
Department of Public Health Director Mark Horton memorialized that e-mail in a letter to Sen. Elaine Alquist, repeating that no decisions would be made until investigations are complete.
“As with all evaluations for new ownership, CDPH will base its determination on the compliance history of the licensee and their capacity to operate a new facility,” the letter says.
Even as the ink was drying on the state's letters, Prime Healthcare issued a Nov. 17 press release, announcing that it had acquired Alvarado Hospital in San Diego:
Prime Healthcare will continue to operate Alvarado as an acute care hospital with an open and improved emergency department. The Company said it looks forward to working with Alvarado's 450 physicians, 1,000 employees and 400 volunteers to provide the highest quality patient care. ...
'We are pleased that Plymouth Health elected to sell Alvarado to Prime Healthcare, a Top 10 Health System in the nation, to carry on its commitment to provide physician managed quality healthcare at Alvarado,' said Prem Reddy, MD, FACC, FCCP, Prime Healthcare's Chairman of the Board. 'We will not only uphold Plymouth's commitment to high quality care, but also enhance the quality outcomes in a cost-effective manner.'
Confused?
Prime Healthcare has described the acquisition as one that required no new operating license from the state. Rather, according to an email that Prime sent to the Department of Public Health, there was "a change of information as the licensee."
The San Diego Union-Tribune found that the Department of Public Health agrees with that reasoning. Here’s what they published on Nov. 17:
Kathleen Billingsley, deputy director of the California Department of Public Health, said she was surprised to learn of the Alvarado acquisition.
'It is important to note that we have an ongoing investigation into Prime Healthcare Services,' she said.
She said the acquisition, however, was not a change of ownership requiring a new license because the legal entity that owns Alvarado has remained the same. Prime bought all shares in Alvarado Hospital LLC, which remains the licensee.
Department of Public Health spokesman Ralph Montano said yesterday that the department plans to respond to the assemblyman and union's letters and will share those responses with California Watch when they are complete.
So it remains unclear how the department will address Assemblyman Marty Block's concerns.
He represents the area where Alvarado is located. In his letter, Block raised the objection that allowing such a deal means any health care provider seeking to run certain facilities can avoid state scrutiny.
Here’s an excerpt from Block's letter, which is posted below. (Here’s another letter to the Department of Public Health from attorneys for SEIU, whose members have labor disputes with Prime Healthcare.)
“If Prime’s assertion that acquisition of Alvarado is not a change of ownership stands, then the Health and Safety Code’s licensing requirements upon a change of ownership at hospitals and nursing homes would be eviscerated,” the letter says.
Comments
via Twitter