A physician builds a hospital empire in California, and gives the finger to insurance companies. A business model of the future?
What is more extraordinary is how Reddy is building his empire. Modern healthcare is largely based on the model in which insurers seek to control costs by paying fixed amounts to doctors and hospitals. Reddy is tearing that down.When Reddy’s company, Prime Healthcare Services Inc., takes over a hospital, it typically cancels insurance contracts, allowing the hospital to collect steeply higher reimbursements. It has suspended services “” such as chemotherapy treatments, mental health care and birthing centers “” that patients need but aren’t lucrative.
(via a reader tip)
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{ 16 comments }
I say good for him. Although his style is heavy handed, he is doing what few physicans and hospitals have the guts to do – cancel poor paying insurance contracts.
This is the only way to finally turn the tables on the insurance companies. What the insurance companies don’t want you to realize is that there is far more demand for services than supply. Cacelling contracts and concentrating on fee for service through the ED/Urgent care/internal docs is the way to go.
We will be seeing more of this.
Blasphemy! Many commenters, and those with other blogs Kevin frequently links to – HealthCareBS – for example, say this cannot be done! What’s more, they say to not take Medicaid and Medicare patients is uncaring and unfeeling.
Physicians will kill this goose, all the while bitching about the current scheme.
I hope its not the wave of the future. Researching Mr Reddy’s past is enlightnening. I recommend it to anyone contemplating any type of relationship with this organization. Mr Reddy and his brother have built their empire on taking over distressed hospitals, turning away uninsured patients, emtala violations (financial triage), closing services, uniton busting, and many other heavy handed means. There sticking it to the Insurance companies does not bug me but the rest has a very bad smell.
He as the right idea with regard to not letting the insurance companies set the rules. I expect his will be a billion dollar company very soon and others will emulate him.
How long he will be around to run it is dicey. Sounds like a total narcissist who will likely self-destruct.
With those prices, I don’t want to get brought to his hospital!
Sort of show the good and bad of an unrestained capitalist greed in medicine. Better service for those who can pay–no service for those who can’t. But this is how it is in India so he has no problem with it.
If you believe that health care is not a “right”, then what do you expect?
Yeah, who needs mental health care anyways? Let others who actually care about people in need deal with *those* people.
Pretty telling that more than a few people (doctors, nurses, you name it) who’ve hard to work under this “model” are not exactly fond of the man running it.
Exactly the wrong model for the wrong reasons. And of course, making money lots of money from it. Ahh, America. Gotta love it.
Keep in mind that in the country from which he comes, corruption and callous disregard for the poor and powerless is endemic in the healthcare system as it is throughout the society. Bribes and kickbacks are a routine part of the professional life of physicians and counterfeit medications and billing fraud the norm. You stay in the hospital until you run out of money and then are put out that day regardless of your condition if you do not pay immediately.
Our government, in an effort to flood the medical market to bring down prices, imported labor from that nation to the extent that there are more specialists from India here than there are in India. It has not brought down rates of course. Bringing in docs from a dog eat dog medical market like that to this country with third party payment and trusting patients and bureaurocrats was like releasing hounds in a rabbit warren.
Healthcare is not a right. To make it a right deprives providers of their rights to their own labor and person. But the Christian and Hippocratic tradition is to exercise that freedom with compassion for the poor.
“Bringing in docs from a dog eat dog medical market like that to this country with third party payment and trusting patients and bureaurocrats was like releasing hounds in a rabbit warren.”
Well said and consistent with my experiences.
Boy… now if we only trained enough of our own. Yet another result of the anti-competitive aspects of Flexner.
Then lobby your state to open more med schools. No one is stopping your state from building ten med schools if they want!!!
Reddy is a “bottom feeder”. He scavenges the nearly dead or dying hospital, then bleeds them further all the while increasing his own personal net worth…..from personal experience….
Anon 12:00AM, what do you think made those hospitals, “nearly dead and dying” in the first place?
When I read this post, “What happens when you refuse insurance” on KevinMD, I wanted to comment with the LA Times link on Dr. Reddy, but was blocked by my firewall. So, I emailed it to Kevin direct. GLAD I DID! It definitely sparked more conversation here on KevinMD than it would have on my
fledgling blog, http://www.UroCanswer.com (sorry, shameless plug!)
Anyways, my not-so-brief comment is this. I do not think Reddy is claiming that health care is not a “right” for everyone. But, the question is.. “is everyone entitled to EQUAL healthcare?” News flash.. this is already not the case. A few examples..
(1) why doesn’t every hospital offer trauma surgery? Many hospitals clearly turn away trauma patients (typically money-losing patients). Any hospital worthy of the designation “Trauma Center” is heavily subsidized to offset financial loss. Otherwise, NO HOSPITAL would do it.
(2) Infertility. Typically, insurance doesn’t cover it. So, if you can’t afford it, you can’t have it. Sorry.
(3) Robotic Prostatectomy. I can go on forever here… Let’s just say for the sake of argument that robotic prostatectomy is equally effective at curing prostate cancer as open prostatectomy. But, recovery is faster, better, hospital stay is shorter, continence is near-perfect, etc.. The technology is around $2M to implement at the hospital level. The surgeon learning curve is high. So, I ask.. is anyone entitled to have this operation, regardless of ability to pay or insurance status? Why is there no CPT code for robotic prostatectomy? Yes, for medicare, it essentially reimburses the same as the traditional open surgery. It is becoming more common for high-volume, high-quality surgeons doing this operation to refuse medicare and any insurance payment, other than those agreed upon beforehand. What about balance billing? “Sir, medicare will pay me $X, but you will have to pay the balance of $Y. Otherwise, I can send you for radiation, or do the open prostatectomy surgery, or send you to another surgeon” Not cool. I do NOT believe in this and would never do it. The cynical side of me thinks that insurance companies and medicare realize this.. so I’m screwed. They won’t issue a CPT code and a higher, fair reimbursement for robotic prostatectomy. Why? they know that I can not, in good conscience, refuse to do what I consider to be the best treatment for my patient.. but maybe that’s just me. Maybe Reddy would turn them away, or send them to me, the sucker who takes medicare and insurance.
I may try to expand on this topic and the Reddy article on my blog. Feel free to stop by..
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http://www.UroCanswer.com
I often blog here in favor of freedom in medicine. This illustrates the limits of the paradigm. Emergency patients are not customers who can shop for their service and reject overpriced services, so we see an unconsciousable charge of $6000 for a day on a vent. The customer can’t haggle over that. In the absence of self-restaint by the provider in pricing non-electice services, then what occurs is a form of looting of the unfortunate the remedy of which is only price controls, which then creates a whole other set of problems.
The one area where I have long concluded that government coercion is morally defensible even by libertarian standards is emergency services. Neither the provider nor patient is free to act in their own economic interests. It is fair to mandate emergency care insurance just as it is auto liability. When you drive you put not only other drivers at risk but also the local hospitals on the hook. On the flip side, it is fair to put fee caps on emergency services by hospitals, allowing unrestrained free price setting for elective services or those stable enough to transfer who prospectively consent to the charges.
Reddy is an embarassment. Unbriddled greed does not mix with Hippocratic values. It is people like him that will cause sensible hospitals to loose their freedom to set their own prices, just as a minority of greedy employers brought regulation into labor relationships. It makes one pine for the days when hospitals were all not-for-profit community enterprises.
We saw this sort of thing in the heyday of the privately owned freestanding psych hospitals in the ’80s. The for profit model has it’s ugly side in the hospital business.
I am not advocating government medicine, just that people in healthcare businesses need to remember that business considerations are the means to an end, not the end itself.
Reddy is no more of an embarrassment than is any other provider. He has simply been able to capitalize on the provider first and provider pocketbook first mentality that has been and is the issue of primacy. Reddy is doing and succeeding with the issues that we routinely see complained about here when it comes to provider compensation. He is getting rid of the services that do not pay and retaining those that do.
We can have a serious discussion about Reddy and his business model once we can get past the taqiyya of Hippocratic Oaths and other such nonsense used to cow the soft-headed and gullible .
excellent posts.. I too find Reddy distasteful, eventhough a tiny voice inside me is tempted to yell “you go man!”
But, I have to, again, wonder why those particular utopian hospitals (the ’80s psych hosp) failed? or as stated earlier, became “nearly dead or dying”? Hospital Darwinism?
Of course, I don’t think we should model our hospitals after Enron either!
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http://www.UroCanswer.com
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