Prime Healthcare Services - Controversy

Controversy

In 2007, the Los Angeles Times ran a news story that alleged that the policies of Prime HealthCare Services, Inc. resulted in higher than average profits at the possible cost of patient care. According to the Times story, "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.... On four occasions since 2002, inspectors have found that Prime Healthcare facilities failed to meet minimum federal safety standards, placing their Medicare funding at risk.”

Prime Healthcare is under investigation by the United States Department of Health and Human Services and the California Department of Justice about concerns over a reported spike in septicemia. The investigation centers around whether the spike in septicemia represents a large public health issue or multimillion-dollar Medicare fraud. Six Prime hospitals ranked in the 99th percentile of U.S. hospitals for septicemia and five were in the 95th percentile.

There are also claims that Prime Healthcare Service engages in upcoding elderly patients to malnutrition. In Mount Shasta, Victorville and the Mojave Desert, Prime has had high rates of kwashiorkor among its elderly patients. At Shasta Regional Medical Center, Prime reported 16.1% of their Medicare patients suffered from kwashiorkor, while California’s average for Medicare patients is 0.2%.

Prime also has come under scrutiny by investigators over expenses on luxury items disallowed by Medicare. Authorities have flagged $491,000 in operating costs in relation to a Eurocopter for the Chief Executive Officer, Lex Reddy, brother-in-law of Prem Reddy. The Department of Health Care Services also identified and disallowed $820,000 for the lease and taxes on a home in Beverly Hills and $303,000 in depreciation on the helicopter and a Bentley. The funds flagged by auditors do not represent tax dollars that have been sent to Prime. Rather, they signify sums that the state will not recognize when compensating the chain for its corporate office expenses.

Prime is currently being sued by Kaiser Permanente for "trapping patients" and then sending their insurance companies highly inflated bills.

In a similar manner, Prime Healthcare has been accused of transferring high numbers of patients from its emergency room to its hospital beds, specifically with patients on Medicare. Some families describe being trapped by doctors at Prime facilities and were unable to see their own doctor at another facility. Former Prime employees have described an orchestrated campaign of admitting Medicare and Kaiser patients – moving them from the emergency room to a hospital bed – in the interest of changing the fortune of a money-losing hospital.

In September 2011, the California Attorney General denied approval for the sale of Victor Valley Community Hospital, stating the sale would not be in the public interest.

In 2012, two executives at Prime Healthcare Services disclosed a patient's chart to multiple media outlets without the patient's express written consent. The release was in response to a California Watch article on Prime Healthcare Services billing practices at Shasta Regional Medical Center, which included claims by a Darlene Courtois about her treatment by Shasta. In this incident, Randall Hempling, the hospital CEO, and Dr. Marcia McCampbell, its chief medical officer, showed up at the offices of the Redding Record Searchlight and successfully convinced the paper's editor not to publish an article echoing the California Watch claims by reference to Courtois' actual medical records.