By Melissa Evans
With some of its most renowned doctors departing and more than 300 staff members facing layoffs, Centinela Hospital Medical Center is in the midst of a tense shake-up after the sale of the struggling hospital three months ago.
Some patients scheduled for elective surgeries are even being moved to other facilities because the hospital’s new owner canceled contracts with their HMO insurance carriers.
“This is a terrible situation for people who have surgeries scheduled and then suddenly canceled,” said Vance Polish, who underwent hip replacement surgery last week. “I couldn’t have waited another week. I was up every night with pain.”
Polish was able to receive his surgery at Centinela, but only because he is old enough to qualify for Medicare. He spent several hours on the phone with insurance agents after learning that the hospital had canceled its contract with his private carrier, Blue Cross.
It is all part of the business plan engineered by Prem Reddy, a cardiologist who bought the 369-bed hospital – critical to the communities of Inglewood, Gardena, Hawthorne and surrounding areas – with promises to turn it around financially. To do that, the hospital can no longer afford to let insurance companies undercut the cost of expensive procedures, said officials with Reddy’s company, Prime Healthcare Services.
Centinela was losing about
$36 million a year from poorly negotiated insurance contracts, low Medi-Cal and Medicare reimbursement rates and uninsured patients, said Von Crockett, Centinela’s chief executive officer.
Because Centinela serves one of the poorest regions of Los Angeles County, it doesn’t have the fundraising power of other hospitals to remain solvent, Crockett said.
Instead, Reddy and other officials put the onus on insurance companies. After the sale was announced in November, hospital officials sent notices to Blue Cross, Blue Shield, Aetna, PacifiCare and Health Net that they wanted to renegotiate rates.
The companies refused, hospital officials said, and as a result, HMO contracts were canceled as of Dec. 31. Centinela still accepts patients covered by PPO plans, and takes Medicare and Medi-Cal.
Emergency room patients aren’t affected at all – they are, in fact, welcomed. Insurance companies are obligated to cover emergency care, and the hospital can charge insurers vastly higher rates without contracts.
This business strategy has proved successful for Reddy, who owns eight other medical facilities from Victorville to Chino. He acquired most of them while they were facing bankruptcy.
The downside to this business strategy is that doctors who provide non-emergency care, including elective surgeries, are being squeezed out of the hospital because HMO insurance won’t cover these procedures. Many say quality will suffer as more doctors leave.
“What we’re seeing is the change of a hospital from a classic community hospital to a downsized hospital with a giant emergency room,” said Dr. Lawrence Dorr, a nationally known orthopedic surgeon who will likely move the bulk of his practice elsewhere.
The Arthritis Institute at Centinela, which draws thousands of patients a year, may close completely. The hospital sent layoff notices to 150 nurses, tech workers, staff and others, but Crockett said talks are under way that may salvage some services before the layoffs take effect at the end of February.
“It just seems unreal to me,” said Geri Ward, director of the institute who was given notice. “People come here from all over the country for training. We’re one of the highest-ranking institutes for joint replacement in the U.S.”
Layoff notices were also sent to
30 workers in the hospital’s rehabilitation center, which is closing, and about
200 nurses and others who worked at Daniel Freeman Memorial Medical Center, which housed an oncology and rehabilitation ward.
Prime Healthcare bought the main hospital in Inglewood for an undisclosed sum, but the soon-to-be vacant Daniel Freeman, along with the Marina Campus in Marina del Rey, remain under the ownership of Centinela Freeman Health System.
Dorr said he will likely move his practice to the Marina Campus, which has plans to expand its facility over the next few years to accommodate more physicians.
Centinela still touts its orthopedic, cardiovascular and sports medicine departments on its Web site – it is widely known as the hospital of the Los Angeles Lakers and Dodgers – but doctors say they are unsure of what the future holds.
“I think the jury’s still out right now as to whether the hospital will be able to continue to provide the kind of care that the community is used to,” said Dr. Larry Paletz, a urologist who served as the hospital’s chairman of the board until the recent sale.
His practice has not yet been affected, “but there’s a lot of worry, a lot of anxiety about what may happen,” he said. “These are my friends, people I’ve practiced with for many years.”
Staff members and physicians, some of whom didn’t want their names used, said morale is extremely low. Talk on the elevators and in hallways has centered around who is leaving, and where people are going, some said.
Patients seem confused. Virgil Davis, a longtime Inglewood resident and Centinela patient, said his doctor’s office got him in quickly for heart surgery this fall because of the anticipated changes.
His wife is scheduled to have heart surgery later this month, and her procedure was unexpectedly moved to the Marina Campus.
“They told us our insurance wasn’t accepted (in Inglewood) anymore,” said Davis, who is covered by PacifiCare. “I wish somebody would tell us what’s going on.”
Doctors agree that the financial situation at Centinela is dire; the hospital loses thousands of dollars every time they perform a surgery. A single pacemaker can cost upward of $27,000, hospital officials say – and the insurance companies don’t even foot the bill for the equipment, much less the staffing costs and supplies needed for surgery.
“This is a tough change, but some of the change may be for the better,” said Dr. Bob Chesney, who runs the Tommy Lasorda Heart Institute, one of Centinela’s premier programs. “I think every hospital CEO is watching to see if this is going to work.”
Reddy places the blame squarely on the shoulders of insurance companies, which have wrangled with him in the past over his tactics.
Ultimately, patients get put in the middle – and in many cases, end up paying higher costs, said Nicole Evans, spokeswoman for the California Association of Health Care Plans, a trade association that represents 40 HMO insurance carriers.
What often happens, she said, is the insurance company pays the contractual rate for emergency care – even if they don’t have a contract in place – and the hospital sends the patient a bill for the difference. The patient should call the insurance company to dispute the cost, she said, but many wind up just paying it.
“They’re already going through a stressful time,” she said. “The hospital shouldn’t be adding to that.”
Evans said insurance companies have an obligation to negotiate fair rates with hospitals as medical costs soar. If they don’t, higher insurance premiums could be passed on to patients, she said.
Crockett, however, said the insurance companies were unbending in their negotiations, and that the hospital would have had to eventually close without drastic measures.
Most agree that would have been devastating to an area of Los Angeles that has lost four hospitals to financial failure in the Past five years, creating a domino effect that has put pressure on fewer hospitals.
Reddy’s approach “isn’t going to satisfy everyone, but what’s the alternative?” said Jim Lott, executive director of the Hospital Association of Southern California, a trade group. “Prime Healthcare selectively chooses hospitals they think they can turn around, and they’ve so far managed to keep hospitals open.”
(c) 2008 Daily Breeze. Provided by ProQuest Information and Learning. All rights Reserved.
Comments