Prime Healthcare Services, a for-profit hospital system, donated an acute-care hospital in California to Prime Healthcare Foundation, the system's not-for-profit affiliate.
Glendora Community Hospital, a 128-bed acute-care hospital in Glendora, Calif., was donated to the Prime Healthcare Foundation free of any existing debt. The sum of the donation was not disclosed.
According to a news release, switching the hospital from a for-profit to a not-for-profit institution “will allow Glendora Community Hospital to broaden its reach in the community, and continue to serve all members of the East San Gabriel Valley and beyond in a compassionate and caring manner.”
Dr. Prem Reddy, the founder of the Prime Healthcare Foundation, and his family have donated $650 million in assets since the foundation began in 2008. That comprises all of the foundation's donations to date.
In 2013, Modern Healthcare reported that Prime's long-term plan is to create dual for-profit and not-for-profit hospital systems.
Joshua Nemzoff, president of Nemzoff & Co., a mergers and acquisitions consulting firm, said the move was likely made by Reddy for tax purposes.
"Obviously, he's a very wealthy individual and pays a lot of money in taxes every year,” Nemzoff said, adding that the changes shouldn't affect operations at all.
Prime did not immediately respond to a request for comment.
With the donation of Glendora Community Hospital, Prime Healthcare Foundation now operates seven of Prime Healthcare Services' 38 acute-care hospitals in 11 states. All seven hospitals were donated to the foundation by Prime Healthcare Services.
Prime Healthcare Services, based in Ontario, Calif., has grown quickly in the last five years. In 2013, it began an “aggressive” expansion plan despite a controversial history with the Service Employees International Union and the government. Last year, Prime walked away from an $843 million purchase of the Daughters of Charity Health System after the SEIU-UHW campaigned to block the sale and the California attorney general imposed 300 conditions on the deal.
In 2010, the California attorney general investigated the company over “upcoding” medical bills, Modern Healthcare reported.
Despite its history, Nemzoff said Prime has proved to be a successful hospital system. “They've had an amazing growth of hospitals and they run their hospitals very well."
Prime Healthcare Foundation also plans to acquire Southern Regional Medical Center in Atlanta, River Valley Health Partners in East Liverpool, Ohio, and the Memorial Hospital of Salem County in New Jersey in the near future, according to a spokesperson.
