Southern California Hospital Chain Shifts Operating Strategy
The owner of a hospital group in California has sparked criticism from health professionals for his billing and patient care practices that result in higher costs for patients, the Los Angeles Times reports.
Prem Reddy, owner of Prime Healthcare Services, has canceled private insurers' contracts after taking over hospitals, allowing the facilities to collect higher reimbursements for care. After contracts are canceled, Reddy's hospitals compensate for the loss of patients by increasing the patient load in emergency departments and admitting patients for longer stays, according to the Times.
Without the contracts, Reddy's hospitals can collect the patient's entire bill at a higher rate, whether the patient is insured or uninsured.
Reddy's company has suspended services, such as chemotherapy treatments, that are not profitable. The Times reports that the company discourages physicians from providing patients with unaffordable treatment, such as new heart pacemakers or knee replacements.
Reddy's hospitals also have been accused of turning away uninsured patients, but Reddy says state data show that the company has increased the amount of care provided to the uninsured.
The hospitals in four instances since 2002 have failed to meet minimum CMS safety standards.
Physicians and staff at the hospitals say Reddy never has tried to influence their medical decisions, nor has he affected care by reducing costs.
However, Josh Valdez, senior vice president of Blue Cross of California, argues that Reddy's "policies will equate to higher premiums and higher costs of care for everyone." He added, "People of California are not going to stand for it" (Costello, Los Angeles Times, 7/8).
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Reddy says he is a friend of California Attorney General Jerry Brown (D), whose office has approved Reddy's proposals to convert a hospital from not-for-profit to for-profit status once he purchases it. Reddy also has contributed $100,000 to a charter school founded by Brown.
Gareth Lacy, spokesperson for Brown, said Brown did not participate in the most recent case involving Reddy's purchase of Paradise Valley Hospital in National City. Lacy added that Brown had no plans to participate in an upcoming case involving another hospital that Reddy's company recently agreed to purchase (Costello, Los Angeles Times, 7/8).