Former SL Hospital Suitor Accused of Bilking Medicare

There will be blood and it may or may not be dirty, according to a federal and state investigation into claims by Reps. Henry Waxman and Pete Stark that Prime Healthcare Services, which once showed interest in purchasing San Leandro Hospital, had overbilled Medicare for up to $18 million in 2008 by fraudulently increasing the number of cases of septicemia they treated

The Los Angeles Times say officials in July became aware of the the abnormally high rate of septicemia, also known as blood poisoning, among older people at facilities owned by Prime Healthcare. The 12-hospital conglomerate showed interest in buying San Leandro Hospital in 2009 only to be rebuffed by Sutter Health, which operates the hospital jointly with Eden Medical Center.

After initial enthusiasm by activists fighting to keep San Leandro Hospital from closing, county officials began to voice doubts over Prime’s business model and its acrimonious reputation among labor unions and insurance companies. An official for Prime told the Times, investigation is an attempt by the members of the Service Employees International Union to “extort concessions’ while it negotiations a new contract.

The company, led by Dr. Prem Reddy, is known for turning around underperforming and bankrupt hospitals in the Southern California area. Prime made a recent foray into Northern California two years ago when it turned a bankrupt Redding hospital into a $30 million earner a year later. Prime’s business model, though, is unsustainable according to some Alameda County health officials who criticized the company for funneling nearly all its patients through more lucrative emergency room visits. Labor unions and insurance are also highly skeptical of Prime, which is known to quickly void existing contracts with insurers, at the same cutting hospital staff.

After a brief flirtation with San Leandro Hospital and vehement opposition from Sutter, the Eden Township Healthcare District, which initially employed Prime’s interest as a talking point against charges there was no interest in the facility, has now moved in a different direction in regards to keeping the hospital open through competing lawsuits against Sutter.