Prime’s Non-Profit Makes Deals
The not-for-profit affiliate of Ontario-based hospital operator Prime Healthcare Services completed two separate deals earlier this week that adds facilities to its portfolio in Texas and California.
The Prime Healthcare Foundation acquired a controlling interest in 226-bed Knapp Medical Center, located in the Southern Gulf town of Weslaco. Terms of the transaction were not disclosed.
Prime officials said it would keep Knapp operating as a not-for-profit, and would invest at least $10 million in capital improvements.
Additionally, Prime launched a new non-profit foundation to support the hospital. The Knapp Community Cares Foundation was initially endowed with $100 million.
“Over the last few years, the hospital board has continuously and openly expressed its interest in finding a solution to the financial challenges that have affected standalone hospitals. We are excited about the long-term stability and financial security this transaction brings to Knapp Medical Center,” said John Lackey, chairman of Knapp's governing board.
In addition to the Knapp transaction, Prime Healthcare Services transferred 131-bed Huntington Beach Medical Center to the control of the Prime Healthcare Foundation. The foundation now controls four hospitals in total.
“The decision to convert Huntington Beach Hospital to a not-for-profit hospital was
based on our desire to better serve the residents and the surrounding communities who rely on the hospital for quality healthcare,” said Prem Reddy, M.D., Prime Healthcare Services' chairman and founder.
Huntington Beach drew headlines in 2011, when the investigative news website California Watch reported it had the highest rate of malnutrition among Medicare patients in the entire state. Its investigation concluded that many of Prime's hospitals had far higher than average reported cases of of kwashiorkor, a form of undernourishment prevalent among African children. Prime has been under investigation by both state and federal agencies for that and other issues.
Prime has vigorously denied the allegations it has overbilled the Medicare program for certain medical conditions.
