Theyre just doing this immoral sucking out of resources. Get our investigations delivered to your inbox with the Big Story newsletter. A company consultant in one of its Rhode Island hospitals discovered dirty, corroded and cracked surgical instruments in the operating room. Almost immediately, Prospect began contesting the agreement. As late as Dec. 10, the receivers special counsel told a public hearing that Lee and his partner were predators, using the hospitals as their private piggy banks. A financial consultant for the receiver also warned in a report that Prospects financial statements through fiscal year 2019 (even preceding the financial stress caused by the COVID-19 pandemic) revealed a worsening state of insolvency and imminent bankruptcy, absent a big capital infusion. Medical Properties Trust, Inc. ( NYSE: MPW) has reported that alleged short seller Viceroy Research LLC, being sued by MPW for defamation and other claims, Senate Committee Probes Top Universities, Museums Over Failures to Repatriate Human Remains. But Brotman has continued to deteriorate. It found that Prospect had submitted an estimated $22.6 million in potentially improper charges, which the federal government had already paid. If you use canonical metadata, please use the ProPublica URL. Doris Burke is a senior research reporter at ProPublica. By January 2019, Prospect had so little cash that it needed an emergency $41 million loan from Leonard Green, Lee and Topper to assuage auditor fears that the company might not remain a going concern and to avoid violating loan covenants, according to Aleman. Its such a brutal case of unabashed greed, said Rosemary Batt, a professor at Cornell Universitys School of Industrial and Labor Relations, who has studied private equitys involvement in health care. Roger Williams Medical, Fatima Hospital amid Baumer and two Leonard Green colleagues, who together made up a majority of Prospects five-member board, left day-to-day health care operations to Lee. A second executive with an ownership stake took home $94 million. By this point, Prospect had grown to 20 hospitals. And so, were not bringing Californias quality program to Connecticut, he said. When Leonard Green made its third attempt to exit, the nominal price was a pittance. Lee was eager to expand, too, confident that his business model could be applied to many more struggling hospitals, multiplying the companys revenues from about $470 million in 2010 to several billion. Billionaire Harlan Crow Bought Property From Clarence Thomas. Prospect and Leonard Green declined to comment on the bill. Leonard Greens point man for the Prospect stake was a former investment banker named John Baumer, a graduate of Wharton and Notre Dame, where his father had worked as the universitys comptroller. And ProPublica has learned of a multiyear scheme at a key Prospect operation MEDICAL PROPERTIES TRUST, INC. (NYSE: MPW) We do not generally permit translation of our stories into another language. Various Prospect facilities in California have had bedbugs in patient rooms, rampant water leaks from the ceilings and what one hospital manager acknowledged to a state inspector looks like feces on the wall. The Fatima union and the pension funds receiver have opposed the sale too. Already deeply indebted, Alta had to borrow more to pay the $5.3 million. Before the monitoring period expired, two of Prospects newly acquired Connecticut hospitals were slapped with immediate jeopardy findings. In an interview, the woman, who asked not to be identified, told ProPublica, They blamed me for something I didnt do. Inter Valleys Tenorio called her a scapegoat., Meanwhile, three lawsuits have charged Prospect with different allegations of billing fraud at its flagship hospital in Culver City. Alta borrowed the rest. Roughly $386 million had gone to Leonard Greens investors and the firm (which gets 20% of all fund profits); $128 million to Lee; $94 million to Topper; and the remaining $37 million was divided among other Prospect executives. Creative Commons License (CC BY-NC-ND 3.0). Prospect Medical Holdings withdraws request under pressure The Baumers live about 30 minutes from the firms Santa Monica offices in a large oceanfront property on Manhattan Beach, purchased, through a corporate entity he set up, for $18.4 million. This one stemmed from patient-safety violations in a mental health ward at 300-bed Crozer-Chester Medical Center, the systems largest hospital. Private equity really wants to see growth fast and get out, Phillips said. The effects were felt almost immediately. But a new problem had emerged behind the scenes during this period: improper Medicare billing. You cant republish our material wholesale, or automatically; you need to select stories to be republished individually. (A Prospect spokesman disputed the claim, insisting that the company had ample liquidity. The companys 2020 financial results have not been made public yet.). WebWelcome to Prospect Medical Holdings Locations We are hospitals and affiliated medical groups working for the benefit of every person who comes to us for care. The sale of the two Rhode Island hospitals and thus the entire deal requires approval from the states health department and attorney general, which first must conduct a review process to assure the transaction meets nine statutory criteria. As elsewhere, Prospects failure to pay bills on time has delayed repairs and resulted in supply shortages. As far as the unions concerned, theyre not welcome in Rhode Island.. Medical Properties Trust Lawsuit Submission Form Sign up to receive our biggest stories as soon as theyre published. Private equity firm Leonard Green and other investors extracted $645 million from Prospect Medical before announcing a deal to sell it and leave it with $1.3 billion in financial obligations. When you looked on paper, it was a beautiful turnaround, said Jack Lahidjani, who was Altas CFO from 2003 to 2006. The size of the problem was a secret. After that is accomplished, firms then usually resell the operation to another buyer within five years. If you share republished stories on social media, wed appreciate being tagged in your posts. No problem, Prospect responded; it wouldnt pay out any more dividends. Lee was whip smart, could be charming when he wanted to and preferred to operate behind the scenes. Lee convinced a Moss Adams senior partner to overrule him something that had never happened, Bogert said, during more than 300 previous hospital audits. Lee became the primary decision-maker. Before his death, the physician told a friend hed become sick after being forced to reuse a single mask for four days. The retirement plan for Our Lady of Fatima, which 2,700 past and current hospital employees were counting on, had been woefully underfunded since 2008. The portrait offered by White was affirmed by other executives, including Paul Smith, a former vice president for finance at Alta, who told ProPublica he recalled having to switch vendors sometimes because we would get cut off. Emergency room staff in at least one Alta hospital lacked chemical reagents needed to perform critical enzyme tests on heart attack patients, according to another former Alta executive who sued the company. These arent mere anecdotes or anomalies. Prospect Medical Holdings, Inc. ("Prospect") leases and operates 13 of MPT's facilities. Minority investors in Brotman accused Lee of cooking its books to defraud them. Prospect Medical Holdings, the California-based company that bought a controlling stake in CharterCARE Health Partners in 2014, will receive the remaining 15% In October 2015, the firm hired Morgan Stanley to find a new private equity buyer for Prospect. After her breathing grew weak while she was battling the virus at home, Long was rushed to another hospitals ER, where she lost two front teeth during an emergency intubation, and spent seven days on a ventilator. The company raised $1.55 billion. The letter, obtained by ProPublica, reported that Prospect had submitted thousands of claims dating back to 2013 that were not supported by audited medical charts. It added: In many instances, diagnosis codes were submitted for dates of service for which there was no evidence in a medical chart confirming that the [Prospect physician] had a face-to-face visit with the beneficiary. Most of this upcoding involved claims that individual patients had made two visits to Prospect doctors on the same day. Making it right is what we should do, Nelson said. As Connecticut in 2016 weighed whether to approve Prospects purchase of three hospitals, the state sent a team to California to investigate five recent immediate jeopardy findings, which had placed one Prospect hospital license on a termination track for cutoff of Medicare and Medicaid funding. Patients needing MRI scans must be taken outdoors and down an alley, past dumpsters and into a hospital parking lot, where the scan is done in a rented trailer. The union is responding to Prospects claims with a postcard that is being mailed this week to 4,000 state opinion-makers. Other firms, facing growing losses, have placed some hospitals into bankruptcy and closed others, offering up their real estate while seeking to sell the rest of their medical operations at bargain-basement prices. In 2012, Prospect paid Leonard Green and its investors a total of $188 million in two rounds of dividends. Were in this for the long term, OK?. The receiver demanded that Prospect help make the fund whole. The problem was discovered in August 2015 during a routine compliance audit by nurses with Inter Valley Health Plan, a California HMO that sent Medicare Advantage patients to Prospect doctors and, as a result, had shared in the improper windfall (unknowingly, according to Inter Valley). Prospect Medical Holdings But Leonard Green viewed Prospects approach as one that could be applied widely and used to acquire more hospitals and reap more profit. The low cash price would value their shares and options at a pittance, dashing their expectations of a windfall. He would just not pay people as a way to negotiate. In 2014, a patients wife filed suit after soaked ceiling tiles fell and struck her in the head while she was sitting in the hospital lobby. The deal hasnt worked out quite as well for Prospects patients, many of whom have low incomes. He hasnt been quoted in the press in more than 20 years. What happened in California certainly is concerning, Prospects president, Lew, acknowledged at the hearing. At a Prospect hospital in Rhode Island, a locked ward for elderly psychiatric patients had to be evacuated and sanitized after poor infection control spread COVID-19 to 19 of its 21 residents; six of them died. But not so in Rhode Island, where Prospect owns its other two hospitals. He had our partners convinced I was being too conservative, said Bogert, now executive vice president for corporate finance at Prime Healthcare, a Prospect rival. Leonard Green, which owns about 60% of the hospital chain, announced plans in October 2019 to sell its stake to Prospect CEO Sam Lee and his longtime business partner for $12 million plus the assumption of $1.3 billion in lease obligations. Our comprehensive networks aim to provide coordinated, In response, Rhode Island terminated the accounting firms contract to avoid any perception of impropriety, motivation, and influence. The state informed Prospect that the termination would delay the review process as Rhode Island needed to hire a new accounting firm. He was very proud of making it impossible to get a dollar out, former CFO Heather said. CASE DETAILS: The filed complaint alleges that defendants made false statements and/or concealed that: (1) Prospect Medical Holdings, Inc. ("Prospect"),