Prem Reddy, founder of Prime

Mar. 9, 2012 | Several Alameda County and Hayward officials say Prime Healthcare, the controversial Southern California care provider under state investigation for its business practices, has shown interest in purchasing the struggling St. Rose Hospital.

Nearby Washington Hospital agreed Feb. 22 to allocate St. Rose $2 million for short-term operations. The Washington Township Health Care District hopes to enter into a joint powers agreement with St. Rose and Alameda County. If a deal is not made, though, the director of Alameda County Health Care Services Alex Briscoe said it may be necessary for St. Rose to entertain overtures from Prime in order to stave off bankruptcy.

“While the St. Rose CEO and board chair have openly stated that they would prefer a public affiliation via a joint powers authority,” wrote Briscoe, “if credit protection becomes necessary, St. Rose may seek an agreement with Prime in lieu of bankruptcy.”

Briscoe, though, appears less than enthused by the possibility of Prime making a second attempt at purchasing an underperforming facility in the East Bay. In a staff report, he described Prime as “a hospital chain weathering allegations of patient confidentiality breaches and Medicare billing fraud.”

Prime previously attempted to buy San Leandro Hospital in 2009 before Sutter Health showed vehemently opposition to the 16-hospital chain entering its discussions with the Eden Township Healthcare District and Alameda County.

A spokesman for Prime declined to comment Thursday on the health provider’s interest in St. Rose.

Briscoe will ask the Alameda County Board of Supervisors to allocate the $2 million fund for use by St. Rose, whose financial viability has come into question over the past eight months. It twice received loans from the Eden Township Healthcare District; once nearly defaulting on loan payments last December. St. Rose had also made similar plans to merge with the Eden Township Healthcare District as late as last month to help achieve greater economies of scale for state and federal financing in tandem with San Leandro Hospital.

The inclusion of Prime may not be anything more than a viable, but highly unattractive option for St. Rose, sources tell The Citizen. Prime’s interest in St. Rose, regardless of the facility’s poor financial outlook, has historically been a common prerequisite for Prime’s large number of acquisitions in Southern California since its founding in 2001.

The company is infamous for purchasing health care out of bankruptcy and quickly turning them into cash cows. Critics though, say their methods, including an affinity for immediately voiding labor contracts and eliminating existing health insurance providers may be a profitable business plan, but ultimately ruinous for the local health care safety net. Prime is also known for funneling a high number of patients through its emergency rooms, thereby, garnering larger insurance premiums.

Briscoe will present a presentation on the proposed partnership with Washington Hospital during next Tuesday’s Alameda County Board of Supervisors meeting.