Valley Health System board gives key partner 90-day notice

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.

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