Prime's history raises eyebrows on hospital acquisition

The cardiologist at the center of the proposed acquisition of six Catholic hospitals in California has attracted both praise and controversy for his cost-cutting-focused approach to struggling acquisitions, the Los Angeles Times reports.

Prime Healthcare Services founder Prem Reddy, M.D., is currently seeking California Attorney General Kamala Harris' approval for an $843-million acquisition of six financially struggling Daughters of Charity Health Systems hospitals. The Service Employees International Union (SEIU) has spoken out against the proposed deal, and Harris' recently-announced bid for retiring Sen. Barbara Boxer's seat will mean she needs union support, according to the article, potentially jeopardizing the deal. Harris' decision is expected by Feb. 20.

Since 2001, Reddy has developed a reputation for cost-cutting measures, which critics say come at the expense of necessary services, the LA TImes reports. A pending lawsuit from Kaiser Permanente accused Prime of unnecessarily admitting emergency department patients rather than transferring them to Kaiser hospitals. Meanwhile, SEIU-United Healthcare Workers West, which represents nearly 3,000 workers at the hospitals Prime seeks to acquire, has been a longtime adversary of the company, according to the Times.  Among other complaints, the union has accused Prime of overbilling Medicare, the subject of an ongoing Justice Department investigation.

A former Prime executive filed a whistleblower suit against the company last January, echoing the overbilling allegations, FierceHealthFinance previously reported.

"Their entire strategy is based on extracting as much money as possible," SEIU-United Healthcare Workers West President Dave Regan told the L.A. Times. "I just think this is a company that's bad for healthcare, bad for patients."

Daughters of Charity CEO Robert Issai disagreed, saying the company has softened its tactics. "[Reddy] goes after hospitals that are almost in bankruptcy," he told the newspaper. "He takes that as a challenge and he feels pretty good about himself that he was able to save these hospitals."

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