Inland hospital district partner puts off debate on termination notice

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.


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