Critics cite new buyer’s 2000 failure
August 02, 2012 10:40 AM
Tomoya Shimura, Staff Writer

VICTORVILLE • Bankrupt Victor Valley Community Hospital seems to have finally found a new owner after nearly two years of purchasing wars and smear campaigns.

The Victorville nonprofit hospital agreed in June to a $33.8 million offer by the Riversidebased KPC Group, which had once failed to close out a deal. Attorney General Kamala Harris will send a delegate to Victorville City Hall on Friday to hold a public hearing involving the proposed sale. Dr. Kali P. Chaudhuri, founder of KPC, is expected to attend the meeting, Executive Vice President Bill Thomas said Wednesday.

If KPC gets Harris’ approval and closes the deal, VVCH will become the seventh hospital owned and operated by Chaudhuri in Southern California and the first in San Bernardino County. Thomas said one of the reasons KPC decided to buy VVCH was that the area had a lot of needy patients.

“We are very adept at providing quality care to folks that really need the most,” Thomas said. “We have programs that work really well for those folks.”

KPC will turn the hospital into a for-profit organization and make a $25 million investment to improve the 45-year-old facility, Thomas said. The hospital would reopen gastrointestinal and catheterization laboratories that have been shut down, while installing a new information technology system, he said.

Thomas said KPC plans to keep all the hospital staff, including the management. The new owner asked Edward Matthews to stay on as the hospital CEO.

“We want to augment the management rather than change the management,” Thomas said.

KPC is working with local physicians such as Dr. Manmohan Nayyar, Dr. Vijay Arora and Dr. Raman Poola to get their ideas on improving the hospital, Thomas said. These three doctors formed Physicians Hospital Management LLC, which served as VVCH’s management company from 2005 until the hospital’s bankruptcy filing in 2010.

“(Chaudhuri) wants to execute doctor-friendly operations, get doctors involved,” Thomas said.

Chaudhuri earned his medical degree in India, spending time in Canada before moving to the United States in 1980. He relocated to Southern California in 1984 because of the “good weather,” settling with his wife and two children in Hemet.

Chaudhuri said officials from Hemet’s hospital — where he’d build up his own practice as a board certified orthopedic surgeon — approached him in the mid-90s for direction when their facility began to struggle. And that “mutually beneficial” partnership started his venture into hospital management.

“We are going to put a lot of money into (VVCH) and we are going to make it better,” Thomas said.

But some critics say that Chaudhuri and KPC have done the opposite in the past.

Under KPC Medical Management, Chaudhuri purchased a bankrupt physician management business called MedPartners with nearly a million patients in 1999. Chaudhuri felt he could turn the organization around, said Thomas, who was a company attorney back then.

Chaudhuri closed clinics and fired doctors and staff members, while specialists stopped accepting his patients because KPC wasn’t paying its bills, according to a report by journalists Donald Barlett and James Steele. In November 2000, KPC Medical Management declared bankruptcy, leaving 300,000 patients without care and, in many cases, without their medical records.

“This was a bankrupt company when we got it, so these people were not being paid when we got the company,” Thomas said. “Health plans ended up moving patients to other medical groups so we didn’t have revenue to continue our operations. … We were losing too much money and we couldn’t turn it around and filed bankruptcy. I thought we did a pretty good job. We brought it back to even. We really improved operations.”

Although KPC Medical Management failed Thomas argued that Chaudhuri’s other operations have been successful.

In 2007, Chaudhuri became the majority owner of Integrated Healthcare Holdings Inc., which owns four Orange County hospitals — Western Medical Center Santa Ana, Western Medical Center Anaheim, Chapman Medical Center and Coastal Communities Hospital. He also bought Physicians for Health Hospitals Inc. in 2010, which runs Hemet Valley Medical Center and Menifee Valley Medical Center in Riverside County.

Tomoya Shimura may be reached at (760) 955-5368 or TShimura@VVDailyPress.com.

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