Prime Healthcare is not the Solution to Hospital Woes

The inclusion of Prime Healthcare into the San Leandro Hospital equation may have larger ramification on the sick and infirm than the loss of the hospital.

The for-profit health care provider located in Southern California and owned by an eccentric cardiologist named Dr. Prem Reddy seems intent on following a tried and true pattern of gobbling up small, cash-strapped hospitals and stripping down costs to make them profitable. In the past seven years, Prime has purchased 13 hospitals in the state.

In many ways, Prime is an example of national health care policy gone wild. Reddy told the Los Angeles Times two years ago the medical field is a commodity like any other that is sold to the highest bidder.

“Why is it in health care we expect to have the same?” Reddy said, It’s an entitlement mentality. Why aren’t the same people asking why everybody shouldn’t be eating the same foods, or have the same clothes or same homes? Those are as essential services as health care.”

Prime typically enters a new market portraying itself as the savior willing to keep the existing hospital running. According to the Daily Review, part of Prime’s proposal will be to honor the current collective bargaining agreement, but in an era of immense public distrust in corporate greed and honesty, critics say the hospital chain is known to slash up to 10 percent of staff as they vowed last year after purchasing hospitals in Garden Grove and San Dimas.

To make the large profits it seeks, Prime’s modus operandi is to strip the new asset of services that fail to make substantial earnings such as chemotherapy and birthing centers. A main source of Prime’s profitability is a reputation for nullifying contracts with insurance companies that, in some cases, reduces their profits by 30 percent in return for the insurance carrier to keep the flow of business steady. By voiding this arrangement, a health care provider like Prime can reap larger profits from the carrier and make up the difference by utilizing expanded emergency room hours. Prime has also shown a propensity for favoring patients with problems that may necessitate longer hospital stays which translate into even bigger earnings.

The story of Prime’s acquisition of Paradise Valley Hospital last year in National City, near San Diego and 10-miles from the Mexican border, could be instructive to what may happen in San Leandro.

The 100-year-0ld hospital run as a charity by Adventist said the facility was hemorrhaging in debt and would need to be closed if a credible buyer did not reveal itself. Prime Healthcare was that Good Samaritan. What ensued was a roiling debate that pitted doctor against doctor, accusations of the faith-based owner of hiding behind religion and tugging at local fears of losing a hospital.

Not many of these aspects differ from what is occurring in San Leandro. The failure of the county to recognize a link between the building of a new hospital in Castro Valley to the possible closing of one in San Leandro has pitted doctors and nurses against each other while stoking jealousy between neighboring communities. In addition, the anxiety among older residents is high with the window of the next few years having fewer hospital services in the area while Kaiser Permanente constructs a new complex on Merced Street and the likely Sutter Medical Center in Castro Valley is built.

Prime’s ability to swoop into a situation and dictate the terms of its perception could be on display tonight when the Eden Township District discloses Sutter’s plan to turn over the hospital to Alameda County. The reported presence of officials from Prime, despite not listed on the agenda, raises the possibility the health care provider plans to portray itself as the cure of all that ails San Leandro. In reality, the sick and poor may have to pay more than ever before to line the pockets of a health care provider to retain their hospital. Sadly, that’s the cost of doing business.

8 thoughts on “Prime Healthcare is not the Solution to Hospital Woes

  1. Let me first call names 🙂 JASON IS AN IGNORANT AND BLIND FOOL. 2015 is fast approaching, and Reddy has yet to prove himself as a trustworthy employer/business owner. Come to Centinela Hospital Medical Center in Inglewood, CA and interview its LOYAL employees who have experienced Reddy's wrath for at least a few years… Investigate these “rumors” and so-called “accusations.” This is when the truth will be revealed. Curse Reddy, his family, his loved ones, those close to him, and all his minions!


  2. And the word I used was “reported” as in by reporters, you know, that old traditional source of “news” which I tend to differentiate from rumor and hearsay.


  3. As Mr. Holmes points out, one of the more interesting parts of the addition of Prime is its leader, Dr. Prem Reddy. If you witnessed his rousing speech a few weeks ago in San Leandro, the guy loves attention. It's his love of the limelight that gives his company a very specific face and makes his personal actions fair game to scrutinized in relation to his business as I think we will see in the coming weeks.


  4. The basis for your fact-finding appears to be founded on hear-say. You strike me as an intellectual and an individual with a good head on his shoulders. With that said, how can you possibly use rumor as a basis for scrutiny? Furthermore, there is one other thing about your very last statement that has me troubled. You mention the hospital remaining in public hands and follow that with a remark about a “free pass.” In the business world or, for that matter, the adult world, there are no free passes. Every effort is either rewarded or punished but free passes are something for grade-school children. Maybe I am confused. Perhaps you can elaborate on that statement.
    As far as the PF Chang's thing goes… I still love their “Chang's Spicy Chicken!”


  5. If one's only criteria for a hospital is losing money or closing, then Prime may have a perfect record, but those are not, and cannot be, the only criteria.

    As for whether Dr. Reddy's personal behavior and choices affect Prime, I would suggest it is relevant as he puts himself both as the public figure and the one running the show, and his personal behavior has reported to have been an issue in the past, in terms of employee retention due to his personal interactions.

    Let's be clear, this isn't a waiter at P.F. Chang's. Dr. Reddy doesn't just “work at” Prime Healthcare, he drives it, he shapes it, he created it.

    I don't agree with all of the reporting by The Citizen, but I've read the proposal, been to the meetings, spoken to the various boards and elected officials… To praise this proposal and this company without proper scrutiny serves no one. I'm thrilled that Prime is interested and hope a contract can be agreed upon (with the hospital STAYING in public hands), but that does not mean that Prime will get a free pass just for doing so.


  6. I am happy to discuss anything you like. You know as well as I do what was implied with the comment and description of Dr. Reddy. We don't need to argue over semantics. I still disagree with your feelings and believe you should evaluate an organization on its merits and not attempt to use personal bias against a particular member of an organization in order to establish a case against the organization. I may not care much for you, personally, but perhaps you own or work at an establishment, such as P.F. Chang's, which I adore. I would offer praise to the organization regardless if I didn't like you. Do you follow me? Anyway, I digress.
    In any case, if we use your “facts & figures,” and I use those terms loosely, should a company like Prime have to terminate 10% of a staff during an acquisition, it only stands to reason that 90% of the employees REMAINED. The loss of employment of the 10% is certainly an unpleasant situation, but imagine if it were 20, 40, 60 or 100% who were left jobless! I hope you keep in mind, as well as your readers, that these hospitals are in peril. There are no safety nets. There is nothing but private enterprise, if it has the resources, to prevent these near bankrupt or, in fact, bankrupt organizations from closing their doors permanently. In an ideal world, the government would be there to save us all and put smiles on our place while absorbing the costs of the business failure and none of us would notice the increase in taxation. What a nice fantasy indeed! Back to reality. Our own government has totally over-extended itself and has no resources left to tap. So, we are back to the beginning of our story. What do we do? Should we sit around and complain miserably? I think not. Let Prime or another organization with a similar business model try to save this failing enterprise. By the way, if you would like to know the details of the proposal that Dr. Reddy presented before the City Council, go to San Leandro Bytes – and click on the power point presentation link within the text. It is all there for everyone. I would be happy to continue this discussion however I will tell you that I will not listen to ANY personal stabs or lambasting of Dr. Reddy since it has no bearing on this whatsoever. Personal feelings aside, the man is a complete success. Let's leave it at that.


  7. The author of this piece has some sort of personal reasons for his ranting. That description of Prime is completely fabricated. Further, the only people that will benefit should Prime elect not to acquire San Leandro will be the ones in the other hospitals serving the area. That hospital is in dire straits and needs a complete make-over. If Prime agrees to keep things the way they are, those people just won the lottery. No other healthcare organization would honor such an arrangement. The author is a bitter fool who would rather use personal insults describing Dr. Reddy as eccentric with negative implications, than to recognize that Dr. Reddy has a perfect track record. No single entity that he has acquired has lost money or failed. That is amazing especially in these times. You can't have your cake and eat it, too, Mister. Get over your sad self and go write about something else. I have an idea, why don't you cover beauty pageants for children? There is a good one for your depth of character and knowledge.


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