According to an article published in the California Watch, an investigative newspaper, Prime Healthcare Services, a Southern California hospital chain, has transferred an unusually high number of patients from its emergency rooms to hospital beds, gaining hundreds of millions of dollars by targeting people with Medicare.

In the article, California Watch reported that an investigation into Prime’s practices showed that patients entered Prime hospitals with legitimate medical problems and ended up targets of a business strategy meant to maximize the number of insured patients treated in hospitals owned by the company. According to California Watch’s research, when compared with Tenet Healthcare Corp., the other large hospital-management chain, Prime’s admittance rate overshadowed Tenet’s 63 percent to 39 percent.

Since the story broke, there has been much controversy regarding the validity of those numbers, so much so that Prime Healthcare Services has begun litigation against California Watch in Alameda Superior Court.

“It is unfortunate that California Watch continues to rely on manipulated data and unsubstantiated allegations fed by Service Employees International Union (SEIU) to publish fraudulent and defamatory statements about Prime Healthcare. California Watch is nothing more than a mouthpiece for SEIU in its smear campaign against Prime Healthcare,” said Prime Healthcare in a press release.

A Prime Healthcare press release noted a number of what it calls flaws in the California Watch article:

• • It fails to consider that at least 142 non-Prime hospitals with ER admission rates among Medicare patients were greater than California Watch’s state average of 40.9 percent, including several well-known nonprofit hospitals.
• • Taking the state average is not a fair way of reviewing admission rates, as admissions patterns vary widely based on a lot of factors such as geography, average age of the seniors, how sick the seniors are, whether the patients come from nursing homes and board and care, belong to Medicare HMOs or not, and how busy the ER is and how often it closes.
• • California Watch fails to disclose that the same OSHPD data it relied on also reveals Prime Healthcare hospitals admit and care for the highest percentage of uninsured patients and offer more charity care than most other California hospitals.
• • California Watch’s claim that there is an ongoing federal investigation of Prime Healthcare is false and defamatory. Prime Healthcare is not aware of any federal investigation. Recently, SEIU made similar false allegations against Prime Healthcare which were rejected by the United States Bankruptcy Court after receiving comments from representatives of Medicare and the California attorney general’s office.
• • Almost all its hospitals were in severe financial distress and/or in bankruptcy when acquired by Prime Healthcare and without its intervention most of these hospitals would have closed their doors. Under Prime Healthcare’s management, these hospitals have been recognized among the top 100 hospitals in the nation, and Prime Healthcare has been ranked as one of the top 10 healthcare systems in the nation by Thomson Reuters (business information source). Prime Healthcare is the only for-profit healthcare system and the only system west of Mississippi to receive this coveted recognition.

“As long as California Watch continues its knowing misrepresentation of the record, Prime has no alternative but to proceed with its efforts to expose California Watch as nothing more than the propaganda arm of the SEIU. In order to expose California Watch’s wrongful conduct, Prime has commenced litigation against California Watch,” said a Prime Healthcare press release.