As a result, Prospect was unable to complete its Securities and Exchange Commission filings, forced to cancel its annual shareholder meeting, delisted from the American Stock Exchange and defaulted on its loans, triggering millions in lender penalties. "Prospect Medical Holdings has notified the Department of Attorney General and the Department of Health this morning It found that Prospect had submitted an estimated $22.6 million in potentially improper charges, which the federal government had already paid. This same hospital, the companys largest, is also the most visible monument to Prospects neglect. Lees experience was in finance, not medicine. WebWelcome to Prospect Medical Group, an independent physician association (IPA) supporting residents of Southern California. How Cigna Saves Millions by Having Its Doctors Reject Claims Without Reading Them, Senate Committee Probes Top Universities, Museums Over Failures to Repatriate Human Remains, If youre republishing online, you must link to the URL of this story on propublica.org, include all of the links from our story, including our newsletter sign up language and link, and use our. MPW LAWSUIT ALERT: Levi & Korsinsky Reminds Faced with that financial plight, these hospitals will be compelled to cut costs even further, making it ever harder to deliver quality care. The matter remains pending. Eventually, word of Prospects practices spread, causing alarm when the company sought to acquire new hospitals in other states. No problem, Prospect responded; it wouldnt pay out any more dividends. Please contact. Circuit Court of Appeals in March 2020. Dozens of lenders, executives, doctors, staffing agencies and hospital vendors filed lawsuits and court claims over unpaid debts and broken agreements. Our comprehensive networks aim to provide coordinated, WebWe are hospitals and affiliated medical groups working for the benefit of every person who comes to us for care. Everyone on Inter Valleys board, he added, accepted that its organization had been reimbursed for false charges. The virus sickened a half-dozen members of the hospitals housekeeping staff, which had been given limited personal protective equipment. Peter Elkind is a reporter covering government and business. Born in South Korea and raised in Tampa, Florida, he was an industrial engineering graduate of Georgia Tech. Other firms, facing growing losses, have placed some hospitals into bankruptcy and closed others, offering up their real estate while seeking to sell the rest of their medical operations at bargain-basement prices. The letter, obtained by ProPublica, reported that Prospect had submitted thousands of claims dating back to 2013 that were not supported by audited medical charts. It added: In many instances, diagnosis codes were submitted for dates of service for which there was no evidence in a medical chart confirming that the [Prospect physician] had a face-to-face visit with the beneficiary. Most of this upcoding involved claims that individual patients had made two visits to Prospect doctors on the same day. At least part of the delay in approving the sale in Rhode Island appears to be self-inflicted by Prospect. All of a sudden COVID comes in, everybody should have surgical masks, and we dont have two days worth of surgical masks, much less two months of surgical masks. Prospect Medical He relented only after a bit of salesmanship: Topper surprised him by turning up at a dinner meeting with 15 doctors who promised to send patients to Altas hospitals. Proposed legislation in Rhode Island threatens to further stall the deal. Prospect promised to spend hundreds of millions more on pension and capital improvements. Billionaire Harlan Crow Bought Property From Clarence Thomas. Text Size. Prospect and Leonard Green declined to comment on the bill. The lawsuit on behalf of Medical Properties Trust investors has been commenced in the United States District Court for the Southern District of New York. Altas facilities were sort of war-zone hospitals. Another of the Medicare Advantage plans that received payments because of Prospects improper claims, CalOptima, said in a statement that Prospect first informed it in March 2016 of an inadvertent and isolated billing error from a single month in 2015. Hed go through three hours of literally just peeling the skin off somebody, Aleman said. They wanted to get rid of it at all costs. In its statement, Prospect said it will keep East Orange open into 2021 while it continues to seek a buyer and thus will surpass our five-year commitment of operating the hospital. The company also said it has met its $52 million capital-spending promise under provisions of its purchase agreement that allow it to count debt payments and routine maintenance costs toward that total. It began preparing to issue a $600 million dividend. But Brotman has continued to deteriorate. Prospect Medical These arent mere anecdotes or anomalies. It eventually turned out there were 3,847 erroneous claims over four years, requiring $2.8 million in repayments to CMS, including $1.7 million from Prospect. MPW LAWSUIT ALERT: Levi & Korsinsky Reminds Medical Almost as quickly as it rose, private equity firms ardor for hospitals has substantially cooled in the past few years, said Lisa Phillips, editor of HealthCareMandA.com, which tracks private equity health care deals. Responding to questions through an outside spokesman, they said they have no intention of abandoning their plans for the companys sale. And ProPublica has learned of a multiyear scheme at a key Prospect operation Billionaire Harlan Crow Bought Property From Clarence Thomas. State officials approved the companys acquisitions on a conditional basis in 2016, while imposing a three-year monitoring regime that health department officials describe as unprecedented. WebProspect Medical Holdings, Inc. Overview. After his death, the hospital failed to notify police. Learn More / Map In the face of more than a year of often-vehement public opposition in Rhode Island, the hospital chain suddenly agreed in the final days of December to pay $27.25 million to resolve a group of lawsuits they had previously refused to settle. Three lawsuits assert that Prospect committed Medicare fraud at one of its facilities. Lee professed his innocence and fought the actions, typically settling for discounted amounts. After the retirement plan settlement was announced, the company took out a large ad in The Providence Journal, stating that by making the $27 million payment, it was helping our retirees and employees, and doing so because we are fully committed to Rhode Island. A second ad solicited support for the companys sale: Today, Prospect seeks state approval to allow its founders to buy out the outside investors in Prospect. Noted the resulting complaint to the California health department: There are mushrooms growing out of the wall (which they cut off and patched back up). The question of whether profits and good medical care can coexist is not a new one in the United States. Given the cash and assets that private equity owners have already taken out of hospitals, their new owners will be left with heavy debt and limited resources as the saga of Leonard Green and Prospect demonstrates. Sign up to receive our biggest stories as soon as theyre published. Creative Commons License (CC BY-NC-ND 3.0). Prospect raised the money by issuing junk bonds. Detailed management presentations to the two 2015 finalists were followed by dinners in Beverly Hills, leading to informal discussions with CVC, which was contemplating a considerably richer offer this time, according to Aleman. Lee became super-involved in overseeing Alta even as Kline Hawkes quickly found an exit, according to Kline. The litany goes on. (The E&Y senior manager assigned to examine Altas financials told ProPublica the misstatement was very easy to find.) Four states approved it but Rhode Island is holding out. Those shares were enough to give Lee and Topper control of Prospect. Indeed, Leonard Green is now on its third attempt to sell Prospect. Investors Extracted $400 Million From a Hospital Chain That Sometimes Couldnt Pay for Medical Supplies or Gas for Ambulances Prospect Medical, which mostly serves low-income patients, has suffered a litany of problems: broken elevators, dirty surgical gear, bedbugs and more. The receiver then sued the company, asserting that Prospect had misled the public and 2,700 current and past hospital employees about the pension funds financial health. On May 1, department supervisor Jerald Ferreira, 63, died of COVID-19. The officials have postponed their decision until November, saying there are missing documents and unanswered questions. The first was the $188 million in dividend payouts previously made to Leonard Green and other investors. As of December 31, 2021, Prospect was MPT's third largest tenant, representing 7.3% of its total assets. Prospect Medical Holdings is a healthcare system that provides compassionate, accessible, quality healthcare and physician services, the statement asserted. A drag-along provision of the agreement would force all shareholders to sell immediately, rather than wait and hope for a better price. Leonard Greens point man for the Prospect stake was a former investment banker named John Baumer, a graduate of Wharton and Notre Dame, where his father had worked as the universitys comptroller. The settlement agreement explicitly requires the receiver to notify state regulators that his objections to the sale are withdrawn. Owner threatens to close Roger Williams Medical, You are are free to republish it so long as you do the following: Copy and paste the following into your page to republish: (Courtesy of California Nurses Association), New Law Aims to Save Oysters on the Mississippi Coast, In Secret Recording, a Top City Library Official Calls Alaska Natives Woke and Racists. According to a pending suit filed by Charles Harper, a 28-year employee who served as director of cardiopulmonary therapy, the hospital fraudulently billed Medicare for individual respiratory therapy while regularly requiring its staff to treat two patients at the same time, a practice known as stacking. Harper claims he was fired for complaining about the wrongdoing. These problems surfaced over the past decade, after the private equity firm purchased the company in 2010. By January 2019, Prospect had so little cash that it needed an emergency $41 million loan from Leonard Green, Lee and Topper to assuage auditor fears that the company might not remain a going concern and to avoid violating loan covenants, according to Aleman. 600 City Parkway West, Suite 1000, Orange, CA 92868 | (800) 708-3230 Recognizing that the bad numbers would surely blow up the deal, Leonard Green and Lee decided to hold off again. Their model was really about just bare minimum, said Mike Heather, who later helped Prospect acquire Alta and served as Prospects CFO from 2004 through 2013. Aleman said the discussed reasoning was that Prospect could bring a far richer price after mining its pending acquisitions for bigger profits. Thank you for your interest in republishing this story. The sale of the land and buildings brought in much needed cash and stabilized the company. That episode, as well as the death of the ER-overflow patient whose body was found on the beach, resulted in immediate jeopardy findings. (The statement from Green and Lee denies they tried to sell the company in 2018. On April 19, 2021, the Court entered the parties stipulated order to submit the matter to binding arbitration pursuant to the binding mutual ), The situation grew dire. This time, two patient deaths triggered the jeopardy findings. If you use canonical metadata, please use the ProPublica URL. Prospect asserts that it promptly addressed the consultants concerns about dirty and damaged surgical instruments, but that it viewed the report as proprietary and thus availed itself of the court system. The company added: As we recently received a ruling from the Federal Court to produce the document, we have complied with the order., Prospect has yet to hand over any documents, according to the union. In 1998, most private equity firms avoided health care. It had effectively replaced its debt payments with rent payments. (Prospect says it believes the assessments are excessive and will pay once a final ruling is given as to what is fair and proper.). But Neronhas approval, announced Tuesday, came at a cost to the company. The bill comes from state senate president Dominick Ruggerio, a Democrat, who previously wrote a letter urging regulators to subject the Prospect sale to the utmost scrutiny and warning that approval posed a probability of serious harm to the health and welfare of all Rhode Islanders. On Jan. 12, Ruggerio introduced a bill, citing Prospects two Rhode Island hospitals, that would impose a one-year moratorium on all hospital ownership transfers involving a for-profit corporation as acquiree or acquiror. The bill has nine co-sponsors. When Leonard Green made its third attempt to exit, the nominal price was a pittance. On this news, MPT's stock price allegedly fell $0.80, or 8.7%, to close at $11.14 per share on February 23, 2023. And it said it is not uncommon for hospitals to utilize a mobile MRI, but plans are underway to relocate the MRI inside a nearby building. Theres so many other places to put their money in health care that they can flip faster, Phillips said. The Private Equity Stakeholder Project, a union-backed research group, has produced detailed reports criticizing Greens history with Prospect. Moodys, the ratings agency, was dismayed by Prospects soaring debt. But a Jan. 29 deadline for the state to approve the deal has been extended indefinitely and other obstacles remain. Call us today @ 800-708-3230. That germ was all over the floor.. In one case, staff returned a belt to an actively suicidal psychiatric patient who then used it to hang himself in his hospital bathroom. The settlement, subject to multiple court approvals that will take several months, will end the receivers public opposition to Prospects pending sale. Prospects spokesman denied DeMauros allegations but declined to address specifics because her litigation is pending. You cant use our work to populate a website designed to improve rankings on search engines or solely to gain revenue from network-based advertisements. Inter Valley began investigating, with help from a law firm and outside consultant. We cant find anything that will make us feel comfortable theyll be good stewards of these safety-net hospitals in Rhode Island, he said. There have been multiple rounds of public hearings and questions to both Prospect and Leonard Green, generating thousands of pages of submissions in response. MPW LAWSUIT ALERT: Levi & Korsinsky Notifies Medical Theyre loaded with debt and anybody sensible is not prepared to buy them.. In April 2008, Alta restated its 2006 revenues, lowering them by about $4 million. Kline Hawkes, the young Los Angeles firm where Lee worked, had made only one previous health care investment, in a medical instruments company. That quality component was always lax in my opinion, one said. Before the monitoring period expired, two of Prospects newly acquired Connecticut hospitals were slapped with immediate jeopardy findings. Leonard Green and the hospital chain, Prospect Medical Holdings, were the subject of a ProPublica investigation in September that explored Prospects history of patient-care violations including some that posed immediate jeopardy to patients, according to multiple government findings along with complaints about deteriorating facilities, broken financial commitments and allegations of Medicare fraud surrounding the company. After digesting the acquisitions in the pipeline, the company projected, revenues and profits would surely soar. All told, for all investments in the fund over 13 years, ProPublica estimates Leonard Green has made more than $1.5 billion for itself from fees and its share of the funds profits. (CVC declined to comment. Investors led by the private equity firm, Leonard Green & Partners, previously extracted $645 million in dividends from the investment, and the firm now seeks to leave behind another $1.3 billion in financial obligations at the chain. His body was later found on a beach 7 miles away; the man had drowned. Theyve squeezed it as dry as they can., Those actions have made it hard for the firms to sell hospitals, according to Eileen Appelbaum, senior economist at the Center for Economic and Policy Research, who studies private equity. The biggest corporations still own more hospitals than private equity firms: HCA, for example, owns about 180; Apollo claims 89 and Cerberus had 37 at its peak, before selling this year. The pattern would continue at Prospect. (Prospect told the SEC the companys investigation had found no intentional wrongdoing. Lee, in his statement to ProPublica, dismissed the significance of the Alta restatement and said the bigger problem at the time was that Prospect was in far worse shape than hed been led to believe. Senate Committee Probes Top Universities, Museums Over Failures to Repatriate Human Remains. The size of the problem was a secret. Then 49, Topper started Alta after recovering from a fire at his home that left him on a respirator, with third-degree burns over 70% of his body. He sensed a major opportunity, according to a corporate history his spokesman provided: While the cost of healthcare was growing at three times the rate of the US GDP, hospitals as a group were inefficient in delivering quality care. Lee quit the private equity firm in 2000 and joined Alta full time, becoming its co-president and a 50-50 partner with Topper. Prospect has a long history of breaking its word: It has closed hospitals it promised to preserve, failed to keep contractual commitments to invest millions in its facilities and paid its owners nine-figure dividends after saying it wouldnt. PROSPECT MEDICAL HOLDINGS IS A WOLF IN SHEEPS CLOTHING. The mailer urges recipients to press state officials to reject the proposed sale. As of this year, when the firm hopes to close the sale, Green has retained its Prospect stake for 10 years; indeed, the $5.3 billion fund that holds that and other investments was launched in 2007, making it venerable in private equity years. Its always the bottom line. In public testimony a few years ago, Prospect executives acknowledged the point. Prospect asserted that no patient harm occurred from the error, which has been corrected, and said the pharmacy is now fully operational.. In a David-and-Goliath battle, a group of Rhode Island officials and a union for hospital workers have so far stymied a multi-billion-dollar private equity funds attempt to unload its controlling stake in a national for-profit hospital chain. That in turn led Prospect to retract its threat of legal action and say, in effect, never mind. All but one of Prospects hospitals rank below average in the federal governments annual quality-of-care assessments, with just one or two stars out of five, placing them in the bottom 17% of all U.S. hospitals. Now Theyre Back. In a letter to Rhode Island officials, Prospect insisted it didnt violate the pledge it made back in 2014 because in 2014, no dividends were planned., That $457 million raised the total in dividends extracted from Prospect since Leonard Green acquired it to $645 million. Los Angeles-based Prospect Medical Holdings is making a last-minute attempt to block Prime Healthcare Services from buying a 384-bed bankrupt Alta borrowed the rest. Prospect settled in 2017, agreeing to pay $275,000 while asserting that the claims were wholly without merit.. Any website our stories appear on must include a prominent and effective way to contact you. As of December 31, 2021, Prospect was MPT's third largest tenant, A company consultant in one of its Rhode Island hospitals discovered dirty, corroded and cracked surgical instruments in the operating room. Sign up to receive our biggest stories as soon as theyre published. I dont know the answer, but I think theres something wicked going on here, Max Wistow, the receivers special counsel, told a public hearing. Starting around 2010, giant private equity firms like Cerberus Capital Management and Apollo Global Management rushed into the hospital business, buying up facilities and assembling chains. A 2018 state inspection found the pharmacy staff at the Culver City hospital had for months ignored findings of fungal air growth, bacterial organisms and mold in equipment used to mix patient medications in a sterile environment. Prospect vowed to spend $52 million on capital improvements and keep the hospital open for no less than five years. Three years into that vow, with losses still running about $1 million a month, Prospects warnings that it wanted to sell or close the hospital spurred state lawmakers to hand the company an emergency $15 million grant. Prospect has managed to silence one prominent group of Rhode Island critics by reversing course and, on Dec. 30, agreeing to settle multiple fraud lawsuits with a $27.25-million payment. Then we suffer and the patients suffer., Paramedics have repeatedly gone to fuel up ambulances using a hospital credit card, only to have it rejected, according to Larry Worrilow, assistant chief for the Crozer-Keystone EMS system. Creditors would not come in to fix things because the hospital owed them money, she said. As late as Dec. 10, the receivers special counsel told a public hearing that Lee and his partner were predators, using the hospitals as their private piggy banks. A financial consultant for the receiver also warned in a report that Prospects financial statements through fiscal year 2019 (even preceding the financial stress caused by the COVID-19 pandemic) revealed a worsening state of insolvency and imminent bankruptcy, absent a big capital infusion. In 2013, four years after buying the hospital, Prospect grouped Brotman with two of its other hospitals, renaming it Southern California Hospital at Culver City. They were very, very dirt cheap in every respect., Things began looking up for the business. In the latest skirmish between Prospect Medical Holdings and Rhode Island Attorney General Peter Neronha, Prospect announced Friday it is withdrawing from the state process for changing its ownership. Leonard Green and Prospect responded to ProPublicas questions in written statements through Sitrick and Company, a crisis PR firm jointly retained on their behalf. According to her suit, these patients were brought from nursing homes and other senior facilities, many well over 100 miles away, when their Medicare benefits there, capped at 100 days, were about to expire. In the restatement, filed with the SEC, Moss Adams explained that Alta had misused and ignored factual information that existed at the time it compiled the inflated financial statements. One day youre like a superstar and the future of the company, said Steve Aleman, who became Prospects CFO in 2013. Baumer and two Leonard Green colleagues, who together made up a majority of Prospects five-member board, left day-to-day health care operations to Lee. But Leonard Green viewed Prospects approach as one that could be applied widely and used to acquire more hospitals and reap more profit. Prospect Medical Holdings, Inc. ("Prospect") leases and operates 13 of MPT's facilities. (Near the end of the reporting for this article, Prospects CEO, Lee, spoke to ProPublica on the condition that he not be quoted.) At the companys flagship Los Angeles hospital, persistent elevator breakdowns sometimes require emergency room nurses to wheel patients on gurneys across a public street as a security guard attempts to halt traffic. In March, Prospects New Jersey hospital made national headlines as the chief workplace of the first U.S. emergency room doctor to die of COVID-19. Prospect Medical Holdings, Inc. - Corporation Wiki It was too late. WebProspect Medical Holdings, Inc. | 14,513 followers on LinkedIn. ), At Crozer-Keystone, as elsewhere, Prospect has aggressively moved to lower costs. It was profitable and had a higher federal quality rating, with four out of five stars, than any other Prospect hospital. But that tension is particularly acute in the case of Leonard Green and Prospect, where private equity has extracted hefty profits from a business that acquires struggling hospitals and relies on Medicaid and other government programs to pay the bills for its impoverished patients. CBS News submitted detailed questions to Prospect Medical about these financial decisions, including about the $457 million dividend and the lease-back Duphily blames the hospitals frequent rotation of its limited staff to different floors for spreading infection. Now Theyre Back. On Jan. 18, the health department and attorney general wrote to Prospect confirming that the Jan. 29, 2021 deadline would be extended, and advised the company, as of this date, we do not have a new deadline for completing the review.. Prospect in turn is controlled by the Lee was demanding and unrelenting, according to people who worked for him. Thats when it reached agreements to spend more than $500 million to buy hospital systems in three states: East Orange General, in New Jersey; three community hospitals in Connecticut; and a four-hospital system in suburban Delaware County, Pennsylvania, west of Philadelphia. Prospect Medical, which mostly serves low-income patients, has suffered a litany of problems: broken elevators, dirty surgical gear, bedbugs and more. Already deeply indebted, Alta had to borrow more to pay the $5.3 million. ), Michael Terner worked as an executive vice president at Prospect for five years and departed around the same time as his father. It went from making about $20 million to losing money. As Mississippis oyster population continues its freefall, state leaders turn to a model that has helped in Louisiana.