Legal problems force Pacific Health hospital closures

Pacific Health Corporation is suspending services at its three remaining hospitals because past legal issues have rendered it "impossible" to maintain operations, the California hospital chain announced Tuesday.

Services will cease at Bellflower Medical Center, Los Angeles Metropolitan Medical Center and Newport Specialty Hospital. The decision follows the suspension of services at Pacific Health's Anaheim General Hospital last week.

"We are committed to preserving safe continuity of care for the community and will maintain professional, medical and nursing staff on site during this transition period to facilitate the movement of patients to other local healthcare facilities," the hospital chain said in a statement.

The legal issues include Pacific Health's $16.5 million settlement with the Department of Justice last year for defrauding Medicare and Medi-Cal. The chain "recruited" homeless people to act as patients and receive unnecessary treatment, for which its hospitals submitted claims.

The hospital chain also faces a $7 million fine for failing to pay employees and bouncing their paychecks. The state Department of Industrial Relations said Pacific Health withheld money from employee paychecks to pay insurance premiums but never gave those funds to insurers, FierceHealthFinance previously reported.

What's more, the Pacific Health closures could signal a statewide trend in California, the Los Angeles Times reported. The Hospital Association of Southern California predicts about 40 California hospitals could close in the next five to 10 years, which would eliminate nearly 10 percent of the state's hospitals.

Experts attribute those impending closures to changes under the Affordable Care Act. The post-reform era will likely force closures among small and mid-size hospitals that lack the resources or bargaining power to compete with large health systems, the LA Times noted.

For more:
- here's the Pacific Health announcement
- read the LA Times article

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