CEO of Roxborough hospital's new owner resigns

Posted: February 24, 2012

The president and chief executive of Prime Healthcare Services, the California company that bought Roxborough Memorial Hospital this week for an undisclosed price, resigned, the company announced Thursday.

Prime Healthcare, which had already owned or managed 14 hospitals in California and one in Texas, has been operating under a cloud of allegations - spearheaded by a labor union it has feuded with for at least five years - that it was improperly billing Medicare for certain infections and other conditions.

The privately-held chain based in Ontario, Calif., has denied the allegations, which led to investigations by state health officials and by the FBI, according to California Watch, an investigative journalism group. An analysis of hospital records released in 2010 by the Service Employees International Union prompted the probes.

Of Lex Reddy, CEO since Prime Healthcare was founded in 2001, company spokesman Edward Barrera said: "He has left the company, but, despite the media speculation, it had no connection to unfounded allegations."

Company founder Prem Reddy, Lex Reddy's brother-in-law, is interim CEO.

Prime Healthcare's strategy is to buy money-losing hospitals and turn them around by cutting costs, eliminating unprofitable services, emphasizing admissions through its emergency rooms, and eschewing managed-care contracts.

Doing so can boost revenue. If a managed-care plan member is admitted, the insurance company has to pay full price, rather than the typically lower, negotiated rate.

"Prime Healthcare always makes a good faith effort to enter into agreements that are fair to both sides and protect the hospital's interests," Barrera said.

Contact staff writer Harold Brubaker at 215-854-4651 or

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