The third suit alleged an illegal patient procurement scheme to generate fraudulent Medicare and Medicaid claims. ), The situation grew dire. On May 1, department supervisor Jerald Ferreira, 63, died of COVID-19. Born in South Korea and raised in Tampa, Florida, he was an industrial engineering graduate of Georgia Tech. Lee couldnt find a buyer, Aleman said: They would have just given East Orange away literally handed over the keys. Conflict between Prospect and Neronha flared on Thursday when the hospital chain threatened to close the hospitals, and take legal action, if the state Lee was eager to expand, too, confident that his business model could be applied to many more struggling hospitals, multiplying the companys revenues from about $470 million in 2010 to several billion. As an organization, we had delegated the role of the quality program to a local level, Senior Vice President Von Crockett testified, without the proper oversight at a corporate level.. Four states approved it but Rhode Island is holding out. Those shares were enough to give Lee and Topper control of Prospect. During negotiations over the sale, Prospect was repeatedly briefed on actuarial studies showing that even after a $14 million contribution that Prospect agreed to make, the plan would run out of money by 2036, while still owing about $98 million in retirement benefits. By 2010, the investing trends had changed. The cases are all pending. The stringent penny-pinching wasnt enough to generate profits at first. You have to send the next closest ambulance. But Brotman has continued to deteriorate. In one case, staff returned a belt to an actively suicidal psychiatric patient who then used it to hang himself in his hospital bathroom. One day youre like a superstar and the future of the company, said Steve Aleman, who became Prospects CFO in 2013. This same hospital, the companys largest, is also the most visible monument to Prospects neglect. WebProspect Medical Holdings, Inc. | 14,513 followers on LinkedIn. Lee professed his innocence and fought the actions, typically settling for discounted amounts. He decided to invest, putting up $3 million in equity toward the $34 million purchase price. 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. The first was the $188 million in dividend payouts previously made to Leonard Green and other investors. The $12 million is to be paid by the company, not the two executives. Prospect and Leonard Green declined to comment on the bill. It also bars any statements to media which would reasonably be expected to cause the reader or hearer thereof to question the solvency or honesty of, or the quality of care or other services provided by Prospect. Itll be fine for six or eight months. (CVC declined to comment. 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. In 2019, after repeatedly promising to keep at least part of the system open, Prospect shut it all, laying off nearly 1,000 employees. The founder of Kline Hawkes was an investor named Frank Kline, who told ProPublica that no person named Hawkes was ever involved with the firm. Other Prospect critics remain undeterred. You cant state or imply that donations to your organization support ProPublicas work. Doris Burke is a senior research reporter at ProPublica. In 1998, most private equity firms avoided health care. By cutting costs and maximizing government reimbursements at its remaining facilities, Alta started to eke out profits from its four remaining hospitals. In February, Aleman, whod been stripped of his stock options when he was suddenly fired last fall, filed suit in California, seeking restoration of his shares and payment of his 2018 bonus. Prospects about-face, a Rhode Island official responded, couldnt remove the initial taint of the original receipt of threatened litigation. (Prospect declined to comment on this matter.). What happened in California certainly is concerning, Prospects president, Lew, acknowledged at the hearing. 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). In April 2008, Alta restated its 2006 revenues, lowering them by about $4 million. (Prospect denies any improper billing and says Harpers job was eliminated because of diminished demand for respiratory services. Making it right is what we should do, Nelson said. Hospital workers have regularly reported staffing shortages, sometimes forcing delays of scheduled medical procedures. 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. Prospect raised the money by issuing junk bonds. In a letter responding to the company, Alemans lawyer denied that his client made any defamatory statements. You cant sell our material separately or syndicate it. Lees first out-of-state acquisition would erase that claim. When it rains in Culver City, water drips from ceilings throughout the hospitals two buildings, forcing staff to relocate patients and plant orange buckets in the hallways. Nix was an unusual acquisition for Prospect. Prospect asserted, by contrast, that all leaks are identified and fixed as they occur. The company said roof replacement has begun on the main patient building. This time, two patient deaths triggered the jeopardy findings. Toppers main role was to be Altas salesman, schmoozing doctors and nursing home administrators to feed Medicaid and Medicare patients into their small community hospitals, located in low-income neighborhoods. Instead, retirees nervous about Prospects purchase were shown a PowerPoint presentation stating that Prospects one-time contribution would stabilize plan assets. Lee attested in writing that the payment would assure that the pensions and retirement of many former employees, who reside in the community, are protected. Prospect told the attorney general that any necessary future payments would be made based on recommended annual contribution amounts as provided by the Plans actuarial advisors. Remarkably, no one addressed who would actually make such payments. But when an email exploring this effort was accidentally sent to Prospect, the company responded by dispatching a letter to Alemans attorney, accusing the former CFO of colluding with others in an attempt to interfere with a Company transaction. It demanded that he immediately cease and desist.. Hed go through three hours of literally just peeling the skin off somebody, Aleman said. Alta borrowed the rest. Prospect Medical Holdings, Inc. filed as a Statement & Designation By Foreign Corporation in the State of California on Friday, July Lee became the primary decision-maker. Prospect refused, and failed to turn over any of the materials, despite an order to do so from the National Labor Relations Board in April 2019, affirmed by the 1st U.S. The money is part of a broader settlement with the court-appointed receiver for the employee retirement plan at Our Lady of Fatima hospital, one of Prospects two facilities in the state. The move, made to qualify for extra government subsidies for treating low-income patients, helped Brotman generate profits. Their moves intensified a shift to for-profit ownership among the nations 5,200 general hospitals: from about 15% for-profit in 2000 to 25% for-profit in 2018, the most recent year for which data is available. Prospect has conducted a public relations counter-offensive. Lees experience was in finance, not medicine. ), For Leonard Green, the exit made a certain sense. With all that Prospect has done for Rhode Island, and will continue to do, we hope the state will recognize the benefits and approve this request. The company issued a press release noting that an outside monitor for the state had found that Prospect had met the commitments it had made for capital spending at the two hospitals. But Prospects penchant for scrimping on staff and medical supplies left its hospitals with little margin for error. Three lawsuits assert that Prospect committed Medicare fraud at one of its facilities. (To inquire about syndication or licensing opportunities, contact. 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. 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. Six members of the environmental services staff, responsible for cleaning patient floors, also got sick. Circuit Court of Appeals in March 2020. 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. They include United Nurses & Allied Professionals, the union for hospital workers at Our Lady of Fatima; elected officials, including five Democratic members of the U.S. Congress, Rhode Islands state treasurer and its senate majority leader; and the Private Equity Stakeholder Project, a union-backed research group that has produced critical reports about Leonard Greens conduct and lobbied the firms public pension fund investors. How Cigna Saves Millions by Having Its Doctors Reject Claims Without Reading Them, 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. We were probably about three weeks behind every other hospital in getting just the basics, said Fatima RN Lynn Blais. In late October, the company which has a lengthy history of litigation threatened to sue an accounting firm hired by Rhode Island to assess the deal because a former accountant at the firm made critical comments to ProPublica about a company that Prospect CEO Lee had been involved with more than a decade ago. The company sold Nixs downtown building to a hotel chain and exited with a big loss. Creative Commons License (CC BY-NC-ND 3.0). Leonard Green, a firm known for its investments in marquee consumer brands like Whole Food Markets and Neiman Marcus, joined the rush. ), But once again, the sale collapsed. The rest was distributed in the form of stock options to Prospects top executives, to whom Lee dangled the possibility of a big future payoff. The Rhode Island officials have subjected the transaction to a high level of scrutiny. Los Angeles-based Prospect Medical Holdings has inked deals to sell its seven hospitals in Connecticut and Pennsylvania. (To inquire about syndication or licensing opportunities, contact. You cant sell our material separately or syndicate it. According to the suit, the company regularly changed vendors to avoid payment and bounced checks as part of its regular cash management process. (Whites suit was later settled.) Lee decided to hold off on a sale. (For example, yesterday can be changed to last week, and Portland, Ore. to Portland or here.), You cannot republish our photographs or illustrations without specific permission. Prospect officials never disclosed the plans dire straits during the state approval process. If you share republished stories on social media, wed appreciate being tagged in your posts. As criticism of Prospect grew during 2020, Rhode Island officials first delayed their decision on the sale to November, citing missing documents and unanswered questions, then extended it again to the end of January 2021. The rosy numbers helped attract a buyer for Alta in 2007: Prospect Medical Holdings, a small, publicly traded company that managed 10 physician groups. By this point, Prospect had grown to 20 hospitals. (The company says it receives 80% of its revenues from Medicare and Medicaid reimbursements.) 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.. Crozer Health, the struggling four-hospital system in Delaware County, and its parent company Prospect Medical Holdings, have at times been unable to pay vendors and contractors who provide vital services to patients at Crozer-Chester Medical Center in Upland, according to staff. In the decade since Leonard Green & Partners, a private equity firm based in Los Angeles, bought control of a hospital company named Prospect Medical Holdings for $205 million, the owners have done handsomely.