
Central Maine Medical Center in Lewiston is in the process of being acquired by Prime Healthcare Foundation, which has agreed to invest $150 million in the health care system over five years. Daryn Slover/Sun Journal file
Since news broke more than a week ago about a California nonprofit slated to take over Central Maine Healthcare this year, questions have loomed about the foundation and how that might impact health care in the community.
Prime Healthcare Foundation is a nonprofit operated by for-profit Prime Healthcare, which owns 44 hospitals, including the 16 managed under the Foundation. The Foundation boasts on its website that it has provided more than $3.4 billion to support communities and provide charity care.
Parent Prime Healthcare is in the process of also acquiring nine other hospitals in Illinois — with $375 million set aside for that acquisition, according to an article Thursday from California-based Victorville Daily Press.
Currently owned by a Catholic-based health system, seven of those Illinois hospitals will become for-profit hospitals if Prime takes them over, according to the article.
In Maine, the Foundation has stated its commitment to retaining local leadership in Central Maine’s hospitals, keeping current names of facilities, keeping current team member positions, honoring provider and physician contracts and maintaining the health system’s nonprofit status.
It also agreed to invest $150 million in the health care system over five years. In return, it will gain ownership of Central Maine hospitals and facilities.
Central Maine Healthcare officials have touted the opportunities the acquisition opens up for it allowing the hospital system to stay financially viable into the future. Central Maine Medical Center, Central Maine Healthcare’s largest hospital, has experienced funding deficits going back several years.
Three important factors
Ann Woloson can think of three reasons to take pause before pushing a large acquisition such as this through without thoroughly considering all options, she said.
She is executive director of Augusta-based Consumers for Affordable Health Care and has been researching the impacts of acquisitions like this on quality of care and affordability nationally.
When looking at hospital mergers or acquisitions, she focuses on three main factors: access to services, quality of care and staffing levels, she said. Those are aspects that can sometimes fall to the wayside after acquisitions and mergers.
There is some data to show that the cost of care tends to rise in hospitals that are taken over by larger systems, she said. In other situations during a takeover of a hospital, she has seen examples of services being interrupted or ended.
“When a for-profit entity is involved with the takeover of a nonprofit health care entity, we’ve seen this in other states, health care costs … rise at a faster pace than they might otherwise,” she said.
Hospital acquisitions and consolidations can have benefits, such as getting steeper medical supply discounts, pooling resources and the ability to negotiate better rates with insurance companies.
But there is research that shows hospital mergers and consolidations can lead to an increase in health care prices. A report published last year from health economists found that of 322 hospital mergers analyzed from 2010-15, overall hospital prices rose by 1.6% afterward.
The Center for Medicare and Medicaid Services rates hospitals on a five-star scale, with more stars earning a hospital a higher rating. There is an overall rating gauging “how well a hospital performs across different areas of quality,” according to its website. The patient survey rating measures patients’ hospital care experience.
Of the 16 Prime Foundation hospitals, 12 were rated by CMS. Of those 12 hospitals, the average star rating of Foundation hospitals was 3.25 stars in 2024, with the average rating of all hospitals rated by CMS having an average of 3.1 stars, according to calculations based on data on the CMS website.
The average patient survey rating of the 14 Foundation hospitals with available patient survey rating on the CMS website was 2 stars but it is unclear what the overall average is of all hospitals rated through the patient survey by CMS.
However, patient and overall CMS ratings vary widely among its hospitals that have had such evaluations, with one hospital earning a five-star rating from CMS and another hospital only earning one star in the same category.
Woloson would like to see the acquisition process slowed down to see if there are better options that would also help the hospital financially, she said.
“I think that before this becomes a done deal, our hope is that policymakers will work with Central Maine Medical Center to figure out, to explore other possibilities, to keep their doors open that would better serve their community,” she said.
Central Maine Healthcare CEO Steve Littleson has previously said that the acquisition is a good option to continue investing in the health system and provide ongoing services to communities. Being part of a larger health care system would be beneficial to Central Maine Healthcare.
“(Our board of directors) did engage in a strategic planning process over a year ago,” Littleson noted. “We really assessed our future and that’s when we came to the conclusion that we just needed to be part of a bigger system with more resources, really, to sustain our future.”
Settlements
Prime Healthcare has been nationally recognized for its care and has won awards and honors for it, a Prime spokesperson said in an email Wednesday. One of its hospitals made the list for the Lown Institute’s Top 10 Acute Care Hospitals in the United States in 2024.
However, it has had its share of controversy, including with two large settlements with the federal government regarding allegations of financial wrongdoings.
In 2018, Prime Healthcare was accused of overbilling Medicare in its hospitals in California from 2006-13 and agreed to a $61.75 million settlement.
In that case, Prime was accused of a corporate scheme in which corporate officials told emergency department providers to admit Medicare patients into the hospital when they only needed outpatient care, according to the U.S. Attorney’s Office in California. In-patient care reimbursement rates are higher.
It was also accused of falsifying information about patient diagnoses to get a higher Medicare reimbursement from 2006-14, which was settled in the same incident.
As part of the settlement, the corporation was overseen by an independent review organization for five years to monitor the accuracy of the company’s service claims for Medicare patients, according to the U.S. Attorney’s Office.
Prime completed that corporate integrity agreement with claim error rates below industry standards and having many other areas showing no significant errors, according to the Prime spokesperson.
“Prime Healthcare’s dedication to clinical quality, health equity and social responsibility includes our commitment to corporate integrity,” the spokesperson said. “Prime Healthcare has a robust national compliance program and successfully concluded an initial five-year corporate integrity agreement, with results that are better than peers …”
Prime Healthcare was also accused of admitting patients into the emergency room who only required outpatient care and billing for more expensive patient diagnoses than the patients had in two of its Pennsylvania hospitals, which resulted in a $1.25 million settlement, according to a 2019 news release from the U.S. Attorney’s Office Eastern District of Pennsylvania.
In a separate settlement, Prime Healthcare settled allegations of provider kickbacks, false claims and billing for a suspended doctor in 2021, according to a news release by the U.S. Department of Justice Office of Public Affairs.
Agreeing to pay $33.725 million, the hospital system was accused of providing kickbacks to a cardiologist for patient referrals after it purchased his practice for a price that was above the fair market value, according to the Office of Public Affairs.
Then it overcompensated the cardiologist after employing him based on the volume and value of patient referrals. The cardiologist involved and Prime CEO and founder Prem Reddy also paid out in the settlement.
From 2015-17 the same cardiologist’s billing number was used to bill Medicare and California’s Medicaid program for services provided by another doctor, whose Medicare and California Medicaid billing privileges were revoked, according to the Office of Public Affairs.
The same settlement also resolved allegations against Prime of inflating bills for implantable medical hardware billed to California’s Medicaid program, the Federal Employees Health Benefits Program and the U.S. Department of Labor’s Office of Workers’ Compensation programs.
Reddy agreed to pay roughly $5 million personally between both of those settlements with the federal government.
In a 2016 interview with Advisory Board, Reddy talked about the approach he took regarding insurances when he started buying hospitals roughly 25 years ago.
Part of that approach to negotiate insurances included focusing more efforts on Medicare and attracting those patients, with a substantial number of them needing hospitalization because they were sicker, he said.
Reddy is certified in internal medicine and cardiology. He founded Prime Healthcare in 2001 with a mission to save hospitals with financial difficulties. He founded Prime Healthcare Foundation several years later. He was awarded the Healthcare Lifetime Achievement Award from the Indo-American Chamber of Commerce among other honors.
In 2015, Reddy founded California University of Science and Medicine in California to address the physician shortage.
‘No findings of fault’
Prime fully cooperated with the Department of Justice to settle the claims with “no findings of fault and a complete release of liability,” according to the Prime spokesperson.
“These settlements were reached so that Prime Healthcare could continue to focus on its mission of saving hospitals to serve communities and ensuring access to quality, compassionate care,” the spokesperson said.
The settlements do not call into question the care and quality that Prime Healthcare is known for among its patients, the spokesperson said.
“Prime Healthcare’s mission has expanded to over 15 states with the support of patients, regulatory agencies and communities,” the spokesperson said. “We are honored to have recently been chosen by multiple health systems in new states to continue their legacies based on our mission, values, ethics, quality, dedication to communities and serving those in greatest need.”
There is a long history of corporate compliance at Central Maine Healthcare, including strict adherence to state and federal requirements and laws, a Central Maine spokesman said in an email Wednesday. It has a compliance committee that provides oversight of its compliance program.
Central Maine Healthcare’s board of directors and outside legal counsel reviewed Prime Healthcare’s history, track record and current compliance culture, including reviewing an independent audit of Prime looking at all aspects of corporate compliance, the Central Maine spokesman said.
“The board of directors of Central Maine Healthcare is confident it has chosen a partner in Prime Healthcare Foundation with a compliance program that is consistent with the health system’s values of commitment, excellence, and integrity,” the Central Maine spokesperson said.
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