Archive for July, 2007

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.