Victorville-based cardiologist Prem Reddy has attracted growing attention as his company, Prime Healthcare Services, has acquired twelve acute care hospitals across Southern California. Prime’s strategy, which has been controversial but successful, is to introduce tight cost controls, eliminate outpatient procedures, thereby forcing patients admissions through the emergency room, and cancel its hospitals’ private insurance contracts, thereby forcing private payors to pay usual and customary fees, rather than the significantly lower contracted amounts.
Recent Prime acquisitions have include Inglewood’s Centinela Hospital and the Encino-based Encino-Tarzana Medical Center, purchased from Tenet. Some observers believed that the next Prime hospital would be the failing Century City Doctors Hospital (CCDH). With 176 beds in a recentlly renovated facility in its epnymous location, CCDH appeared to have the potential to compete with Cedars-Sinai and UCLA for the most desirable patients. Unfortunately, it was saddled with roughly $60m in debt from the renovation and couldn’t accelerate its revenues quickly enough. According to Deborah Crowe’s report for the Los Angeles Business Journal, CCDH was never an attractive target for Prime. First, CCDH owners were leasing the equipment and the property, so there was nothing to acquire. Second, CCDH’s boutique model was at odds with Prime’s model of “scrappy community hospitals.”
No other prospects to operate the hospital are on the horizon. While Cedars-Sinai and UCLA are arguably better off as the result of one fewer competitor, patients are decidedly worse off as a result of the loss of 176 more hospital beds in L.A.
