A maverick California cardiologist continues to expand his burgeoning hospital empire, which now stands to challenge some of the biggest chains in the state. While the rapid pace of his acquisition is drawing attention--he's acquired six hospitals during the past year alone--what's really got the industry buzzing is the fact he's canceling all of the hospitals' contracts with health insurance plans.
Dr. Prem Reddy's Prime Healthcare Services now owns eight hospitals in California, putting the upstart firm on a footing similar to giants like Kaiser Permanente and Catholic Healthcare West. While some critics contend Reddy's hospitals turn away the uninsured, and state regulators have accused them of occasional safety violations, Reddy has termed the problems "insignificant" given the scale of his operation. He's more prone to cite his financial success, which include several stunning turnarounds of struggling hospitals into profit centers.
Once Prime acquires a hospital, it usually takes some aggressive steps to improve margins, frequently closing less-profitable services like mental health and chemotherapy and terminating insurance contracts. Critics say that on large scale, this approach could destabilize the state's healthcare market, as it could cut access to critical treatments. Reddy, for his part, says he's merely more efficient than his competitors.
To find out more about Prime:
- read this Los Angeles Times article [1]
Related Article:
CA hospital operator boots HMOs. Report [2]
Reddy's made millions with his prescription for change. Report
Links:
[1] http://www.latimes.com/news/local/la-fi-reddy8jul08,1,2454708.story?page=2
[2] http://www.fiercehealthcare.com/story/spotlight-ca-hospital-operator-boots-hmos/2006-10-20