The Orange County Register reports that a Santa Fe Springs-based healthcare management company has acquired Pacific Hospital of Long Beach. The move by College Health Enterprises Inc. to purchase Pacific Hospital comes as Pacific Hospital faces state and federal investigations into alleged fraudulent spinal surgeries for workers’ compensation cases.
The deal was confirmed Tuesday evening by John Molina, CFO of Molina Healthcare Inc., and whose Long Beach-based company will be involved in managing the community hospital at 2776 Pacific Ave., a first in its portfolio of businesses. Molina said he expects the hospital to expand with the rollout of Obamacare, which is designed to give medical service to low-income people. “The focus of Pacific Hospital is to create access to what before had been barriers,” he said.
Financial terms of the acquisition by College Health, which was founded in 1986 and operates hospitals in Cerritos and Costa Mesa, were not disclosed. The deal became effective at midnight Tuesday, said Molina. As of late Tuesday, Barry J. Weiss, president of College Health, hadn’t returned a phone call seeking comment.
Molina Healthcare, a managed care insurer specializing in Medicaid-eligible families and individuals, said it will form a separate business unit to manage College Health’s acute-care services at Pacific Hospital. The new Molina Healthcare unit is to be called American Family Care Hospital Management, Molina said.
Molina said the newly created business unit will retain more than 300 of Pacific Hospital’s 700 workers. He was uncertain how many of the employees College Health will keep.
As part of the deal, College Health is to run two of Pacific Hospital’s psychiatric units. One is located at the main campus, with a smaller one located at Pacific Avenue and Pacific Coast Highway.
In June, the State Compensation Insurance Fund filed a complaint in federal court in Santa Ana claiming Pacific Hospital of Long Beach and other entities affiliated with it have been running scams for years to illegally boost payments for medical services provided to injured workers. SCIF wants to recoup some of the $160 million it has paid over the past dozen years under civil statutes used to prosecute organized crime syndicates. The Fund filed the federal lawsuit under the Racketeer Influenced and Corrupt Organizations Act against Pacific Hospital owners Michael D. Drobot Sr. and his son Michael R. Drobot Jr., the principals of HealthSmart Pacific, and several companies they operate, alleging five different schemes to illegally boost payments by the insurance fund.
The fund uncovered the alleged schemes after it launched an investigation into Pacific Hospital’s bills. It had learned of reports that the Federal Bureau of Investigation had served search warrants at the hospital and an affiliated entity, Industrial Pharmacy Management.