Prime Healthcare Threatens to Put 6 California Safety Net Hospitals into Bankruptcy

[Aug. 8, 2014] LOS ANGELESThe owner of Prime Healthcare Services is threatening to put six struggling California hospitals into bankruptcy if he purchases them and can’t get major contract concessions from the unions representing the workers in the facilities.

Prem Reddy, Prime’s chairman, president and CEO, made the threat three separate times in a recent meeting with Dave Regan, president of SEIU-United Healthcare Workers West (SEIU), which represents the workers in the hospitals.

Prime has submitted a bid to purchase all six hospitals in the financially strapped Daughters of Charity system, whose hospitals serve mostly low-income patients. Daughters has been losing $10 million a month since the start of the year.

“In his fanatical pursuit of these hospitals, Prem Reddy is now resorting to threats to stop our union and Daughters of Charity workers from opposing the sale,” Regan said. “He appears willing to decimate healthcare in these communities to get what he wants.”

Prime Healthcare acknowledges it is under federal criminal and civil investigation for allegedly overbilling Medicare. A whistleblower lawsuit filed in 2013 alleges the company fraudulently overbilled Medicare and Medicaid about $50 million. A separate lawsuit filed last year by a group of doctors in San Bernardino County claims they are being denied access to their patients because they refuse to participate in Prime’s scheme to unnecessarily keep patients overnight in the hospital in order to increase revenue.

The hospital chain also has been fined by the California Department of Public Health for incidents in which patients died, and paid a large fine for violating patient confidentiality. Reddy has a history of buying hospitals, reducing services, cutting contracts with insurance companies, and increasing prices to patients.

Putting the hospitals into bankruptcy would wipe out most of the system’s pension obligations to thousands of workers, leaving them without the retirement income they were counting on, and would likely nullify union contracts.

The daughters of Charity hospitals are: Seton Medical Center, Daly City; Seton Coastside, Moss Beach; O’Connor Hospital, San Jose; Saint Louise Regional Hospital, Gilroy; St. Vincent Medical Center, Los Angeles; and St. Francis Medical Center, Lynwood.

SEIU-UHW represents workers at three Prime-owned hospitals in California and currently has a labor dispute with the company.

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