Hospital kitchens fail to meet basic hygiene levels

August 14, 2007

Almost half of all hospital kitchens in England are failing to meet basic standards of cleanliness, with evidence of medical waste found on food handling equipment, staff with poor standards of hygiene and infestations of cockroaches and mice, according to inspection reports. more…

Valley Health execs OK vote to sell hospitals

August 9, 2007

The Press-Enterprise Board members of Riverside County’s largest hospital district on Wednesday night approved holding a Nov. 6 election that could result in the sale of practically all assets, including hospitals in Hemet, Sun City and Moreno Valley.

About 200 people attended a public meeting in Hemet on Wednesday night to express both support and derision for the plan to sell to Select HealthCare Solutions.

The Del Mar-based hospital-development group wants to buy the district’s assets, including Hemet Valley Medical Center, Menifee Valley Medical Center and Moreno Valley Community Hospital.

Glen Newman, a Hemet resident, described the deal as a “giveaway.”

“This contract is so prone to favor the buyer that it stinks,” he said.

For the sale to be finalized, it has to be approved by a simple majority of district patrons.

Among the provisions of the sale agreement:

The purchase price is set at $135 million and includes substantially all the district’s assets, including the three hospitals; Hemet Valley HealthCare Center, a skilled nursing facility; and the Medical Arts office building in Hemet.

Select would make a deposit of $14 million, which would be used for operating capital and to meet obligations. Of that amount, $9 million would be nonrefundable if Select did not complete the transaction, including if voters reject the sale.

If voters do not approve the sale, Select will buy Moreno Valley Community Hospital for $47 million, with the $14 million deposit credited toward the purchase price. If Select fails to close the purchase on that hospital, Valley Health will retain the entire $14 million deposit.

Valley Health System would no longer continue to exist as a local health care district, which would not provide community health services similar to those provided by other districts that operate hospitals.

Dr. Kali P. Chaudhuri, chairman of the current hospital-management company, and his affiliates would  be allowed to have a role in the new management for at least five years, and they would be having voting control over the new hospital operations for at least five years.

VHS Releases Sales Agreement

August 8, 2007

Press-EnterprisePatrons of Valley Health System are expected to go to the polls Nov. 6 to approve the proposed sale of assets of the district, which operates hospitals in Hemet, Sun City and Moreno Valley.

More than a month after agreeing to sell to a San Diego County-based hospital development group, the Valley Health board on Monday released the proposed asset-sale agreement.

A special board meeting is scheduled for 6 p.m. Wednesday on the second floor of the Hemet Public Library for the board to discuss and vote on the agreement and issue a resolution calling for a public vote.

Select HealthCare Solutions, of Del Mar, wants to buy substantially all the district’s assets, including Hemet Valley Medical Center, Menifee Valley Medical Center and Moreno Valley Community Hospital. A simple majority of votes is needed for the sale to be approved.

The proposed sale agreement, more than 100 pages long, addresses various areas of the sale, from the purchase price to the future of the hospital district once the sale is completed and role that the district’s key partner, Dr. Kali P. Chaudhuri, would have in the future of the hospitals.

“We’ve tried our very best to cover everything and protect the community,” said Patrick Searl, chairman of the Valley Health board. He said the proposed sale agreement tried to anticipate and address any questions about the sale.

Among the provisions of the proposed sale agreement:

The purchase price is set at $135 million and includes substantially all the district’s assets, including the three hospitals; Hemet Valley HealthCare Center, a skilled nursing facility; and the Medical Arts office building in Hemet.

Select would make a deposit of $14 million, which would be used for operating capital and to meet obligations, once the board approved the agreement. Of that amount, $9 million would be nonrefundable if Select did not complete the transaction, including if the voters did not approve the sale.

If voters do not approve the sale, Select will buy Moreno Valley Community Hospital for $47 million, with the $14 million deposit credited to the purchase price. If Select fails to close the purchase on that hospital, then Valley Health will retain the entire $14 million deposit.

Valley Health System would continue to exist as a local health care district, which would provide community health services similar to those provided by other districts that no longer operate hospitals.

Valley Health would terminate the existing contract with the hospital-management company. A nationally recognized independent management company unaffiliated with the current management would be hired to manage the hospitals. Chaudhuri, chairman of the current hospital-management company, and his affiliates would be allowed to have a role in the new management for at least five years, and they would be having voting control over the new hospital operations for at least five years.

Searl said the sale to Select HealthCare was the best hope for the hospital district, which he said was “undercapitalized” and losing about $12 million a year.

“I believe it is Valley Health System’s only chance to keep the hospitals open,” he said.

Searl said the provisions concerning Chaudhuri were placed in the contract to address head-on any concerns about the controversial manager of the hospitals.

“This was pretty much asked by the public,” said Searl, who said disengagement with Chaudhuri was the only way to assure voter support for the sale. “These provisions were needed because of the political reality.”

But some critics remain unimpressed.

Chaudhuri “is one of the smartest businessmen I’ve ever met,” said Clyde Osborn Sr., a former hospital district board member defeated in his bid to win a hospital board post last year. “He will appear again.”

Chaudhuri, with the district, co-owns Valley Health Care Management Services LLC, which handles the district’s operations. Chaudhuri ‘s 15-year management contract with the district expires in 2013, but the board has sent Chaudhuri a notice of termination, alleging that revenue targets were not met. Chaudhuri has said he will step away without a fight if the sale to Select is completed, but he has reserved the right to question the termination notice in the future.

Contacted Monday, Chaudhuri said he has not yet seen the proposed sale agreement, but he also said he’s satisfied with the provisions concerning him that were read over the phone by a reporter.

“I have no ulterior motive,” he said. “I’m doing this willingly. This way I hope the hospital will survive. … If I didn’t do it, the hospital could end up like other hospitals in Southern California that have closed down.”

He said he wants the hospitals to remain open because he, too, lives in the community.

Select HealthCare President Matthew Cutler said the thoroughness of the proposed sale agreement should quiet what he described as “a vocal majority” opposed to the sale.

He said he has previously disclosed his funding partners, including Southern Co./Healthcare REIT in Indianapolis; Capital Source, a Bethesda, Md., health care financing company; and the physicians’ groups in Hemet and Menifee.

Chaudhuri & Cutler: a Crook & a Cheat

August 7, 2007

Bankrupted the physician practice management company (KPC Global Care) and left 300,000 patients without medical records. 2,500 employees and physicians were left without jobs. Several serious patient care concerns were raised, in 2000.

Whereas the management company went bankrupt, Chaudhuri siphoned off monies through real-estate holdings and off shore reinsurance companies.

Bankrupted a pharmacy company, Southern California Pharmacy, in 2000.

Used his ownership in Hemet Community Medical Group, an IPA, to borrow $ 3 million from Valley Healthcare System, a healthcare district to fund his private acquisition as part of shared risk pool (Jeff Lang, CEO of the hospital was gone).

Chaudhuri through a complex scheme became part owner of Integrated Healthcare Holdings, Inc. (IHHI) that operates four hospitals in Orange County; Chapman Medical Center, Coastal Communities Hospital, Western Medical Center – Anaheim and Western Medical Center – Santa Ana. 49% of the real estate is owned by Chaudhuri, Ganesha Realty, LLC. Whereas he was prevented from managing the hospitals by the State, he recently exercised the option to acquire 39.7 million shares of IHHI along with his attorney William Thomas and joint Bruce Mogul and Larry Anderson to take over the control of the Board. The Court appointed a retired judge to the Board. Judge Lewis said the future of IHHI’s hospitals was “too important to allow Dr. Chaudhuri any potential involvement with the running of this company.”

Chaudhuri orchestrated the Valley Health System’s Board to sell the three district hospitals to Select Healthcare that has no track record of operating hospitals. Board of Directors, Darren Magness is Chaudhuri’s henchman and Dr. William Cherry is a full time employee of Dr. Chaudhuri’s related company. Most of the supporting physicians receive substantial payouts from the affiliated HCMG in addition to being aspiring to be owners along with Chaudhuri in Select i.e., Drs. Nakka, Rastogi, Tiwari, Mathias, etc.

Chaudhuri has a management contract with the hospital district since 1998 with an annual fees of $ 9 million per annum. The operations have steadily deteriorated with an estimated $ 12 million in losses for fiscal year 2006 alone. Chaudhuri and his affiliated physicians that manage the operations to date now want to be owners.

The not for profit board can hire an able management company. If Select can borrow money, the District could borrow the same and improve the operations. After all, it is the same area and the same hospitals. Nothing is changing by Select with no hospital management experience and the same doctors that failed the system in the first place claiming to resurrect the operations.

Select has no track record of either owning or managing hospitals. Mat Cutler the infamous representative of Select operates out of his car and on a small residence (maybe an apartment) out of Del Mar. He cheated several physicians out of their investment in Perris Valley Hospital and bankrupted the place. There are no positive accomplishments that anybody could site of Mr. Cutler.

The Board needs to take the responsibility or failure and should resign. The Attorney Generals Office should step in and monitor the process whether sale or refinancing. A credible investment banker should be hired to recommend to the lay board. The best options in turning around the operations of the healthcare district.

Chaudhuri is simply a crook, that too a failed one. Mat Cutler of Select is a low level cheat (Chaudhuri and Cutler, a crook and a cheat).

Inland hospital district partner puts off debate on termination notice

August 1, 2007

Press-EnterpriseValley Health System key partner Dr. Kali P. Chaudhuri is criticizing the hospital district board for giving him a notice of termination of his management contract, but he said he would “postpone any debate” on the matter so as not to risk the impending sale of the assets of Riverside County’s largest hospital district.

Hospital board members want to cancel Chaudhuri’s management contract because they say he failed to meet a requirement that the district maintain a certain level of revenue.

The board is engaging in counterproductive steps, Chaudhuri said, by giving him notice of a plan to cancel the contract instead of waiting until things shake out regarding the proposed sale of district assets to a San Diego County-based hospital development group.

He promised, however, to cooperate and do his best not to complicate the sale to Select HealthCare Solutions of Del Mar. However, he said he was reserving his right to question the proposed termination in the future.

The contract-termination notice, signed June 1, stated that the effective date of contract termination could be either Sept. 9 or Oct. 9, depending on the applicability of some contract provisions.

“I’ve already gone on record saying that I’m willing to terminate the … management agreement upon the successful closing of the proposed sale of all the VHS system which was voted unanimously by the Board,” he wrote.

He also said in the letter that he disagreed with the contentions raised by the termination letter, but “for the good of our VHS system, I sincerely believe it will be productive to postpone any debate regarding our respective positions at this time while the district is attempting to transition its facilities.”

Board Chairman Patrick Searl, who signed the termination letter, disagreed with Chaudhuri.

“Everyone’s just exercising their options under the contract,” Searl said by phone Tuesday.

“No one can tell the future,” he said, and should the planned sale with Select HealthCare Solutions not follow through, the board wants to be able to make decisions about management.

“We’re just covering our bases,” he said.

Searl said it is not yet determined who will manage the hospitals if the sale doesn’t go through and Chaudhuri is out of the picture.

Chaudhuri is chairman and 50 percent owner of Valley Health Care Management Services LLC, which handles the district’s operations. The hospital district owns the other 50 percent.

Valley Health System’s service area stretches from San Jacinto to Menifee and Idyllwild to Sun City and is home to about 360,000 people. The hospital district operates Hemet Valley Medical Center, Menifee Valley Medical Center and Moreno Valley Community Hospital.

Chaudhuri’s 15-year management contract with the district expires in 2013.

Valley Health officials have been working in recent weeks on an agreement that would address the terms of the sale of district assets to Select HealthCare Solutions. District voters would have to approve the sale agreement.

The notice of termination said the management company failed to meet requirements concerning debt service and revenue because of losses.

Chaudhuri said by phone Tuesday that the losses were not completely his fault.

“All the big decisions have to have their approval,” he said. “We can only recommend … the board has veto power.”

He said he has no direct involvement with or knowledge of the sale to Select HealthCare Solutions. He also said he is willing to step aside without a fuss if the sale is completed.

Group seeks to stop sale

July 20, 2007

The Valley Chronicle, CA -He said 350 doctors of the 400-plus in the system have signed letters opposing the hospital sale, a rate of 85 percent to 90 percent.

Valley Health’s Chosen Suitor has History of Failure in Perris Hospital

July 20, 2007

The man behind the impending sale of all the hospitals within Valley Health System said he lost about $300,000 involving the now-shuttered Perris Community Hospital, but insists that experience should not be held against him as he pursues Riverside County’s largest hospital district.

If anything, Matthew Cutler, president and CEO of Select HealthCare Solutions of Del Mar, said, he picked up slack from the failed Perris hospital that he plans to put to use as he goes about acquiring Valley Health’s hospitals, which include Hemet Valley Medical Center, Menifee Valley Medical Center and Moreno Valley Community Hospital.

“It should affect it because it etched on my mind what to do with a medical development project,” said Cutler, who described himself as a manager in the failed Perris hospital.

Board members said they have found nothing to make them question Cutler’s trustworthiness.

Chairman Patrick Searl said the hospital district did a background check on Cutler as part of their due diligence. He added that district officials are aware of his involvement in the failed Perris hospital.

“He’s an manager like everyone else, and he lost money like everyone else,” Searl said. “My hopes for the future of Valley Health System rest with the Select deal.”

Darren Magness, one of the district board’s directors, said he still believes in Cutler. He said directors spoke with Cutler’s financial backers and are convinced that they could follow through with financing for Valley Health’s assets.

But others say Cutler needs to be more forthcoming with his role in the Perris hospital.

“He’s intimately involved with a failed hospital in Perris,” said Dr. Neal Simpson, who said some local doctors lost money on that venture.

He said there has been no discussion with doctors about Cutler’s involvement with the Perris hospital. Simpson added that the medical staff did not get a chance to talk to Cutler before the board chose Select HealthCare Solutions.

Select HealthCare Solutions bested three other suitors — including Kaiser Permanente — that wanted to acquire all or parts of Valley Health’s assets. Since agreeing to sell to the company, Valley Health officials have been working on an agreement that would address terms of the sale.

Voters within the district, which stretches from San Jacinto to Menifee, Idyllwild and Sun City, would have to vote to approve the sale agreement before it could be finalized.

Perris Community Hospital, also known as Valley Plaza Doctor’s Hospital, was closed in 2005 after years of financial struggle.

Built in the 1970s, the Perris hospital had endured bankruptcies, several previous closings, at least eight owners and repeated name changes.

Cutler said he invested in the hospital at the behest of another investors’ group with which he has worked in the past, but that investment ultimately failed, he said.

“If people are telling you that I’m responsible for the Perris hospital, that’s correct,” he said.

Officials of Southwest Hospital Development Group, which owned the Perris hospital at the time of its closure, were unavailable for comment Tuesday.

Cutler said several physicians each lost between $50,000 and $150,000 on the failed Perris venture. Local physicians who reportedly lost money could not be reached for comment this week.

“We’re not interested in Valley Health System because of the physician but because of the facilites,” he said.

Doctors want to see Valley Health System sale contract

July 20, 2007

More than 40 doctors at Valley Health System are calling on the hospital district to delay signing a contract with the potential buyer of the district’s hospitals until they have a chance to see what the contract says.

The hospital district board is finalizing the proposed sale contract with Select HealthCare Solutions of Del Mar to acquire all the Hemet-based hospital district’s assets, which include Hemet Valley Medical Center, Menifee Valley Medical Center and Moreno Valley Community Hospital.

Agreement on a contract is anticipated by Thursday, but it’s unclear whether it would be signed that day.

A petition signed by the doctors urges the board not to sign the contract until they have had time to review it and meet with the buyer and the board.

“I would like to know what the contract says,” said Dr. Tin Tun, a Hemet internist and one of the signatories of the petition.

“Nobody knows what it says,” he said.

He said he wants to know what the contract says about emergency-room operations and he also has questions about the track record of Select HealthCare.

Select HealthCare President and CEO Matthew Cutler said he has “no problem” releasing the proposed contract before it is signed, but said it is up to the board.

“It’s their game,” he said. “At the end of the day, it makes no difference to me because if the public doesn’t approve it, it’s not going to pass anyway.”

He said he expects the contract to be released to the public by the end of the month.

Dr. William Cherry, hospital district director, said he prefers that the contract be publicly released before signing, but does not know if that is planned.

“I would hope that the medical staff can take a look at it before it’s done,” he said.

Select HealthCare Solutions bested three other suitors that wanted to acquire all or part of Valley Health’s assets. Since agreeing to sell to the company to acquire the assets, Valley Health officials have been working on an agreement that would address terms of the sale.

Voters within the district, which stretches from San Jacinto to Menifee and Idyllwild to Sun City, have to vote to approve the sale agreement before it could be finalized.

Cutler said the proposed contract is now at least “a couple hundred” pages long, but described it as a “simple sale agreement” that is “very straightforward.”

Cherry said he has not seen a draft of the proposed contract.

Dr. Neal Simpson, a Hemet physician who initiated the petition, said the medical staff wants to see the contract so that issues that affect them could be addressed before it is finalized.

“Once the documents are signed, the language is fixed,” he said. “You can’t go back and change the language.”

He said doctors want to know details of the proposed contract, including what role, if any, the district’s key partner, Dr. Kali P. Chaudhuri, would play.

“Every doctor I know is concerned that this contract is going to change Dr. Chaudhuri from being a failed manager to majority owner of the district,” he said.

Both Cutler and Chaudhuri have said that Chaudhuri is not an investor in Select HealthCare, although as a physician, Chaudhuri would have the opportunity to participate in a hospital-ownership plan like any other doctor. Chaudhuri, in a previous interview, has agreed to step aside as manager of the hospital district to give way to Select HealthCare.

Cutler said that even if doctors do not see the contract before it’s signed, terms could be changed if both he and the board agree to it.

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Valley Health System board gives key partner 90-day notice

July 20, 2007

Press-Enterprise The clock is ticking for Valley Health System’s key partner, Dr. Kali P. Chaudhuri.

Hospital board members want to cancel Chaudhuri’s management contract because they say he failed to meet a requirement that the district maintain a certain level of revenue.

“We’re just fulfilling our obligation under the contract,” said board Chairman Patrick Searl, noting that the revenue requirement likely will not be met because of losses over the past year.

The board has sent Chaudhuri a 90-day notice of cancellation of his contract. Chaudhuri said he plans to appeal the decision.

Chaudhuri, with the district, co-owns Valley Health Care Management Services LLC, which handles the district’s operations. Valley Health operates Hemet Valley Medical Center, Menifee Valley Medical Center and Moreno Valley Community Hospital.

Chaudhuri’s 15-year management contract with the district expires in 2013.

Valley Health officials have been working in recent weeks on an agreement that would address the terms of the sale of district assets to Select HealthCare Solutions of Del Mar. Voters within the district, which stretches from San Jacinto to Menifee and Idyllwild to Sun City, would have to approve the sale agreement.

If voters approve the sale, then the issue with Chaudhuri becomes a moot point, since Chaudhuri has agreed to step down as manager if the sale goes through, Searl said.

Board director Darren Magness said the management contract requires that the hospital maintain a certain cash flow over the district’s debt. He said the district spends about $9 million a year servicing debt, and current cash flow is below that required by the contract. He said the notice was sent to Chaudhuri about 10 days ago.

He said he supported board efforts to seek a bond, which failed, and subsequent efforts to sell the district assets. He said he also agreed to step aside as manager without a fuss to any buyer, as long as it was not Kaiser Permanente, which tried to buy the Moreno Valley hospital; or an old rival, Dr. Prem Reddy, chairman of Prime HealthCare, which also sought to buy Valley Health’s assets.

Chaudhuri said he has worked hard to keep the district hospitals open despite lack of financial support from the public.

Chaudhuri buys stake in O.C. hospital group

July 6, 2007

Riverside physician was forced to withdraw from IHHI bid two years ago because of earlier bankruptcy.
Dr. Kali Chaudhuri, who two years ago was forced to withdraw a bid to be majority owner of a group of four central Orange County hospitals, has exercised a warrant to buy a minority stake in the same company, Integrated Healthcare Holdings Inc.

According to a filing with the Securities and Exchange Commission on Thursday, Chaudhuri, a physician and entrepreneur based in Riverside, has acquired 39.7 million shares of IHHI, which makes him the company’s second-largest shareholder.

A group of Orange County doctors led by Dr. Anil Shah, a Santa Ana cardiologist, is the largest shareholder in IHHI with 59.1 million shares.

Larry Anderson, president of IHHI, said the company plans to disclose further details about Chaudhuri’s shareholding in a filing with the SEC on Monday.

Chaudhuri sparked opposition from doctors and regulators in 2005 because of his financial past. In 2000, a chain of clinics that he owned, KPC Medical Management, went bankrupt, stranding 300,000 patients without medical records and owing $400 million to creditors.

As part of his agreement to withdraw from the 2005 deal, Chaudhuri got a warrant to buy stock in IHHI starting in 2007.

Chaudhuri couldn’t be reached for comment today.

IHHI, which had a net loss of about $19.8 million in the 12 months through March, is beset by turmoil, with shareholders and management fighting in court for control of the company.

An Orange County judge has said he plans to rule July 11 on whether to order IHHI to call a special shareholders meeting to elect a new director to the board. A new director could break a 3 to 3 deadlock on the board that has prevented the company from refinancing its high-interest debts.

IHHI owns Western Medical Center-Santa Ana, Western Medical Center-Anaheim, Chapman Medical Center in Orange and Coastal Communities Hospital in Santa Ana.