TRMC: Doctors, hospital battle in court -AND- N.Y. hedge fund eyes control of battered Adeptus

CAL/AAEM News Service at
Sun Apr 16 21:30:03 PDT 2017



April 3, 2017


TRMC: Doctors, hospital battle in court



ospital-battle-court/100006500/> Visalia Times-Delta



By Luis Hernandez


A long and bitter dispute between Tulare Regional Medical Center doctors,
its administrators and board members wound up in court Monday.


A trial expected to stretch into next week could resolve whether the
hospital board legally replaced the medical executive board that supervised
the doctors who treat patients at the hospital.


The board claimed it acted because it believed a survey for the federal
Medicare and Medicaid agency was about to result in critical payments being
cut off by the hospital. That claim is expected to be challenged during the
non-jury trial before Judge David Mathias.


Hospital administrators say they had lengthy disputes with the doctors'
medical executive committee over whether doctors were properly granted
privileges at the hospital and thereafter appropriately supervised.


The doctors say the hospital acted illegally by replacing the medical
executive committee, without notice, with one of the hospital board's


Dr. Abraham Betre, the hospital's former chief of staff and head of the
ousted medical executive committee, the first witness, was asked about the
survey in January 2016 conducted for the Center for Medicare Services by the
state health department. Hospital officials claim the survey uncovered
malfeasance by the medical staff. But Betre said the survey was much broader
than that.


"Surveys are to make sure patients are getting proper care. It's to
safeguard patients. That's their purpose," Betre said. "They look at all the
hospital. They looked at the entire hospital."


In opening statements, lawyers for the doctors and the hospital laid out
their case.


"There was such dysfunction, it needed to be addressed," said Carlo Coppo,
who's representing the hospital and the board. "The EMC is accountable to
the board. We have to have accountability."


Michael Amir, representing the removed medical personnel, said the
hospital's administrators and the medical personnel are to remain autonomous
from each other.


"There's no question the medical staff needs to be independent," he said.
"All experts will testify to that."


Amir, continuing in his opening statement, said the medical group's bylaws
were violated when the removal occurred. He said doctors and hospital
administrators should have worked together to address items bought up during
the state officials' visit.


"There was no effort to solve the issues," he said.


In addition, Amir said the medical group's bylaws say doctors must come up
with rules and regulations. He said attorneys for HealthCare Conglomerate
Associates, which operates the hospital, came up with the bylaws for the new


Coppo said the board members voted to remove the doctors based on the
information available.


"No decision was made in isolation," he said. "It was a dysfunction of the
governing board and the medical staff."


Amir, also during his opening statement, said Dr. Parmod Kumar, a long-time
board member now facing a recall election, recruited six other doctors and
established a group that replaced the removed personnel.


Those doctors, Kumar, Parul Gupta, Ronald Ostrom, Gary Walter, Rebecca
Zulim, Joshua Trujillo, Frank Macaluso, are not at fault, said their
attorney, Ben Fenton.


"They saw a change needed to be made," he said. "These are individuals who
saw dysfunction. They saw it on a daily basis. They were acting in the best
interest of the hospital."


Amir said the Tulare hospital case may have an impact beyond the local


"This is an important case," he said.


The California Medical Association, based in Sacramento, is keeping a close
watch on the case. In a statement, CMA said the organization believes
medical decision makers should be insulated from influence by hospital
administrators. Already, CMA filed an amicus brief, supporting the Tulare
medical staff who brought the suit. The amicus brief is a legal document
showing support for the case.


"We are dedicated to protecting the ability of doctors, individually and
trough their medical staffs, to care for patients," said Dr. Ruth Haskins,
CMA president. "Not only are doctors professionally educated and trained to
provide proper medical care, they have the ethical and legal duties to put
the well-being of patients first."


Haskins said she disapproves of the developments at TRMC.


"The Tulare Regional Medical Center isn't meeting requirement for medical
staff independence and self-governance - putting patients care and the
viability of the entire hospital in jeopardy," she said. "This convenient
power grab is based on hospital administrators' failed attempt to solve
difference with the original medical staff and lacks legal or factual




April 5, 2017


N.Y. hedge fund eyes control of battered Adeptus



mpaign=financedaily> Modern Healthcare



By Dave Barkholz


A New York hedge fund is poised to gobble up free-standing ER chain Adeptus
Health after snapping up $212.7 million of Adeptus' debt.


Deerfield Management, which is led by investor James Flynn, said in a
regulatory filing Tuesday that it intends to own and operate Dallas-based
Adeptus, possibly through a bankruptcy restructuring. Adeptus missed a
bridge loan payment on March 31, leading to Deerfield's debt purchase.


Adeptus is the nation's largest operator of freestanding ERs, with 66
locations under the First Choice Emergency Room brand. The company operates
24 of those locations via joint ventures with hospitals, including
not-for-profits such as Arlington, Texas-based Texas Health Resources.


Deerfield now owns Adeptus' entire senior debt and just short of 10% of the
company's battered common shares, the hedge fund noted in its filing.


Once a high-flyer on Wall Street with shares trading as high as $115 in late
2015, Adeptus has been in a tailspin since November when it surprised
investors with major losses and revelations of a cash crisis. Its shares
closed Tuesday at $1.33.


Deerfield noted in its filing that Adeptus may be headed for Chapter 11
restructuring. The hedge fund said it "would provide further bridge and
debtor-in-possession financing to the company in connection with a
court-supervised restructuring of the company."


Deerfield's goal is to control Adeptus and continue to operate it in
collaboration with its hospital partners as well as other creditors, the
fund said.


In a separate filing Tuesday, Lewisville, Texas-based Adeptus said a
restructuring would likely wipe out current shareholders and leave their
current holdings valueless. An Adeptus spokesman declined to comment


Adeptus has seen greater competition in its non-joint venture markets from
hospitals and other freestanding ER rivals looking to provide convenient
access points for patients away from their often-crowded hospital ERs. HCA
Holdings, the nation's largest investor-owned hospital company, has 60
freestanding emergency departments in 14 of its markets and plans to expand
to 80 such facilities by early 2018.


During the third quarter that ended on Sept. 30, Adeptus' joint-venture
facilities performed better than those operated independently by Adeptus.


The company reported that patient volumes at the hospital-owned facilities
increased to 32,086 patient visits in the third quarter, an increase of 39%
from the 23,038 visits logged in the same quarter a year earlier. Revenue
from those visits increased to $40.3 million, a jump of 18% from the prior


Volumes at Adeptus' stand-alone centers deceased 19% in the third quarter to
24,243 patient visits. Revenue at those centers fell 23% to $50 million from
$65 million in the year-earlier quarter.




Jeff Wells
Deputy Editor, CAL/AAEM News Service


Brian Potts MD, MBA
Managing Editor, CAL/AAEM News Service

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