Prime Healthcare Services
Encyclopedia
Prime Healthcare Services (Prime) is a hospital
Hospital
A hospital is a health care institution providing patient treatment by specialized staff and equipment. Hospitals often, but not always, provide for inpatient care or longer-term patient stays....

 management company in Southern California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

. Founded by Dr. Prem Reddy
Prem Reddy
Dr. Prem Reddy is a cardiologist and a major owner of Prime Healthcare Services, Inc., which owns several hospitals in California in the United States....

 in 2001, it is based in Ontario
Ontario, California
Ontario is a city located in San Bernardino County, California, United States, 35 miles east of downtown Los Angeles. Located in the western part of the Inland Empire region, it lies just east of the Los Angeles county line and is part of the Greater Los Angeles Area...

, California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

. As of December 2010, Prime Healthcare operated 14 hospitals and a medical group in 5 regions: San Diego region, Inland Empire region, Orange County, Los Angeles metro, and Redding in Northern California.

Controversy

In 2005, two former nurses at Desert Valley Hospital
Desert Valley Hospital
Desert Valley Hospital is an 83 bed acute care facility in Victorville, California, USA. DVH is owned and operated by Prime Healthcare Services, Inc. , a hospital management company located in Ontario. PHS was founded in 2001 by Prem Reddy, who acts as its present Chairman of the Board...

 won a lawsuit in which they claimed they were improperly fired after they accused hospital management of providing inadequate care to save money and Reddy of repeatedly reporting to work while under the influence of alcohol. In February 1999, Reddy was arrested for allegedly attacking Dr. Harry Lifschutz at Desert Valley Medical Group. Reddy jumped over a desk in the doctor's waiting room and allegedly attempted to choke him and take a laptop from Lifschutz's office.

On July 8, 2007, the Los Angeles Times
Los Angeles Times
The Los Angeles Times is a daily newspaper published in Los Angeles, California, since 1881. It was the second-largest metropolitan newspaper in circulation in the United States in 2008 and the fourth most widely distributed newspaper in the country....

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
United States Department of Health and Human Services
The United States Department of Health and Human Services is a Cabinet department of the United States government with the goal of protecting the health of all Americans and providing essential human services. Its motto is "Improving the health, safety, and well-being of America"...

 and the California Department of Justice
California Department of Justice
The California Department of Justice is the department in the California executive branch under the leadership of the California Attorney General.-Description:It has 5344 employees and a budget of $791 million...

 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
Medicare Fraud
In the United States, Medicare fraud is a general term that refers to an individual or corporation that seeks to collect Medicare health care reimbursement under false pretenses...

. Six Prime hospitals ranked in the 99th percentile of U.S. hospitals for septicemia and five were in the 95th percentile.

There is also evidence that Prime Healthcare Service engages in upcoding elderly patients to malnutrition
Malnutrition
Malnutrition is the condition that results from taking an unbalanced diet in which certain nutrients are lacking, in excess , or in the wrong proportions....

. In Mount Shasta
Mount Shasta
Mount Shasta is located at the southern end of the Cascade Range in Siskiyou County, California and at is the second highest peak in the Cascades and the fifth highest in California...

, Victorville
Victorville
Victorville could refer to:*Victorville, California, a city in San Bernardino County, California, United States*Victorville shoulderband, a species of gastropod in the Helminthoglyptidae family...

 and the Mojave Desert
Mojave Desert
The Mojave Desert occupies a significant portion of southeastern California and smaller parts of central California, southern Nevada, southwestern Utah and northwestern Arizona, in the United States...

, Prime has had high rates of kwashiorkor
Kwashiorkor
Kwashiorkor is an acute form of childhood protein-energy malnutrition characterized by edema, irritability, anorexia, ulcerating dermatoses, and an enlarged liver with fatty infiltrates. The presence of edema caused by poor nutrition defines kwashiorkor...

 among its elderly patients
Senior citizen
Senior citizen is a common polite designation for an elderly person in both UK and US English, and it implies or means that the person is retired. This in turn implies or in fact means that the person is over the retirement age, which varies according to country. Synonyms include pensioner in UK...

. At Shasta Regional Medical Center, Prime reported 16.1% of their Medicare
Medicare
Medicare may refer to any of several publicly funded health insurance programs:*Medicare *Medicare *Medicare - See also :*Medicaid*Medicare Australia*Medicare Resources - China*Medicare Rights Center - United States...

 patients suffered from kwashiorkor. The state of California
California
California is a state located on the West Coast of the United States. It is by far the most populous U.S. state, and the third-largest by land area...

 average for Medicare patients is 0.2% suffering from kwashiorkor.

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 of Prem Reddy
Prem Reddy
Dr. Prem Reddy is a cardiologist and a major owner of Prime Healthcare Services, Inc., which owns several hospitals in California in the United States....

. 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
Bentley
Bentley Motors Limited is a British manufacturer of automobiles founded on 18 January 1919 by Walter Owen Bentley known as W.O. Bentley or just "W O". Bentley had been previously known for his range of rotary aero-engines in World War I, the most famous being the Bentley BR1 as used in later...

. 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 maintains that their billing practices are legal and proper and claim that the high rate of kwashiorkor is a result of proper diagnosis of malnutrition. They also claim that they are the victim of a campaign by Service Employees International Union
Service Employees International Union
Service Employees International Union is a labor union representing about 1.8 million workers in over 100 occupations in the United States , and Canada...

 (SEIU), but the California Medi-Cal fraud director has stated that his bureau had initiated an investigation before SEIU released their findings.

Prime is currently being sued by Kaiser Permanente
Kaiser Permanente
Kaiser Permanente is an integrated managed care consortium, based in Oakland, California, United States, founded in 1945 by industrialist Henry J. Kaiser and physician Sidney Garfield...

 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 it's 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
California Attorney General
The California Attorney General is the State Attorney General of California. The officer's duty is to ensure that "the laws of the state are uniformly and adequately enforced" The Attorney General carries out the responsibilities of the office through the California Department of Justice.The...

 denied approval for the sale of Victor Valley Community Hospital, stating the sale would not be in the public interest.

Response to recent controversy

According to sources at PHS, Prime Healthcare hospitals do not use a diagnosis of malnutrition to increase reimbursement. Indeed, the relevant (i.e., where the diagnosis affected reimbursement) malnutrition rate at all Prime Healthcare hospitals was 3.6%, which is much less than the rates referenced in the article. For example, the relevant malnutrition rate at Huntington Beach Hospital was 5.3% rather than the 39% reported by California Watch.

In addition, the higher than average malnutrition rates at Prime Healthcare hospitals are the result of Prime Healthcare's commitment to providing high quality healthcare for all of its patients for which Prime Healthcare should be applauded rather than criticized. Published studies estimate that up to 15% of ambulatory elderly patients, up to 44% of homebound elderly patients, up to 65% of hospitalized elderly patients, and up to 85% of nursing home patients are malnourished. Given these statistics and the morbidity and mortality rates associated with undetected and untreated malnutrition, Prime Healthcare hospitals have implemented a nutritional screening program in order to improve patient care outcomes and decrease mortality and morbidity. This program includes policies and procedures designed to ensure that each elderly patient admitted to the hospital receives a nutritional screening. Physicians also routinely order serum albumin tests and promptly assess patients based on the serum albumin levels and other malnutrition indicators. While this initiative has undoubtedly improved patient care outcomes and decreased mortality and morbidity, it has also resulted in more Medicare patients being properly diagnosed with malnutrition and the average malnutrition rates being higher at Prime Healthcare hospitals than other hospitals. However, the increase in malnutrition diagnoses has not lead to a similar increase in reimbursement as a substantial majority of the malnutrition diagnoses did not lead to enhanced reimbursement. Rather, these quality measures and Prime Healthcare's commitment to providing the highest quality of patient care lead to Prime Healthcare being ranked as one of the Top 10 Health Systems in the Nation by Thomson Reuters, the only for profit hospital system to be so recognized.

Hospitals

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