One year ago, the tranquil city of Redding was facing the likelihood of losing Shasta Regional Medical Center (SRMC), one of its two local hospitals. The facility was in bankruptcy until Prem Reddy, the brash and outspoken owner of the Southern California-base Prime Healthcare swooped in to save the hospital.
According to an article in the Record Searchlight (Redding, Calif.), SRMC has emerged from bankruptcy after Prime purchased the hospital to a remarkable $38 million in net patient revenue in just one year. Net patient revenue is not viewed as profit but operating revenue, but a steep reversal of fortune for the once-struggling operation. Randall Hempling, the CEO of SRMC, who has been seen at nearly every public meeting regarding San Leandro Hospital told the paper, "We've turned the corner."
Travel to the opposite end of the state and the folks of San Jacinto and Hemet will not speak of Prime in the same miraculous tones. In fact, local politicians in the area are, ironically, in a battle with Prime somewhat similar to San Leandro's current situation with another corporate behemoth, Sutter Health.
A special election Dec. 15 will allow residents of the Southern California outpost to decide whether its two bankrupt hospitals will be purchased by a physicians group of over 130 doctors or face closing. Prime, whose business model is based on gobbling up bankrupt and underperforming hospitals, has bitterly fought the sale with five lawsuits, four of which have been unsuccessful. Supporters of the sale to the physicians group successfully forced the change of elections materials when it was found Prime used the name of fictitious group in literature to rebut the Dec. 15 measure.
At times, Alameda County officials and state Sen. Ellen Corbett have voiced unease with the possibility of Prime fully entering the equation to keep the hospital and emergency room services open. When Dr. Bill West was appointed to the Eden Township Healthcare District last week, he briefly spoke of Prime in the same two-sided terms before abruptly stopping mid-sentence before giving his full opinion of the profitable, yet controversial corporation. Local pols, from Mayor Tony Santos to the city council have been far more keen in giving Prime a chance to revamp the hospital, which Sutter says loses up to $500,000 a month. San Leandro residents have also voiced displeasure of Prime's exclusion from the debate as proof Sutter has it in for the community hospital.
In the past three months, Sutter has rebuffed Prime's offer to both purchase San Leandro Hospital and to be part of proposed "hybrid" plan that would house rehabiliation, surgical and emergency services at the hospital. Undaunted, Prime has quietly stayed on the sidelines as spectators of the situation. Hempling told The Citizen in September, Prime could take over San Leandro Hospital at a moments notice, but apparently over Sutter's dead body. Alex Briscoe, the Director of Alameda County Health Services, recently summed up the prevailing wisdom saying Sutter would rather fall on their sword before it allowed Prime to set up shop within miles of the soon-to-be rebuilt Eden Medical Center.
While the shocking turnaround by Prime in Redding could be a blueprint for San Leandro Hospital, it did not come without costs which explains the trepidation by some in Alameda County. Prime took over SRMC just weeks after filing for Chapter 11 bankruptcy last year. It immediately laid-off 150 employees and cancelled the existing health insurance contracts. As SRMC transformed into a more sleek business model for Prime, the city's other hospital Mercy Medical Center was overwhelmed. Since Prime claimed the pre-existing insurance contracts deprived them of additional profits, Blue Cross fought back and labeled SRMC an out-of-network provider. What subsequently occurred is Mercy became overwhelmed with patients and was eventually cited by the state for health violations. The hosptial says the violations stemmed from the precipitous increase in the volume of patients.
Health officials in the area, have told The Citizen, Prime's business model of funneling patients through its emergency room doors makes an end around insurance providers thereby spiking health insurance premiums for everyone. One county official said Prime's tactics are not sustainable and could bust an even bigger hole in the state's heatlhcare system. Sutter has successfully shielded Prime from San Leandro Hospital, but while many are far from head over heels about Reddy taking over the hospital, an overwhelming number of residence want to, at the very least, have the conversation.
The Citizen FILE ON...PRIME HEALTHCARE AND SAN LEANDRO HOSPITAL
>>>County Reiterates Proposal; Possible Bidder Wows Crowd, June 9.
>>>A Prime Example of Healthcare Havoc, July 27.
>>>Potential Hospital Buyer Met with Sutter Last Month, Sept. 1
>>>Sutter Nixes Hybrid Model SoCal Health Provider, Sept. 17.
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