Not a Dunn Deal

Photo by Gustavo ArellanoTenet Hospital's sale of four OrangeCounty hospitals looked like a done deal—until state officials looked into the buyer's background.

Now, state Senator Joe Dunn says he'll ask California officials to examine “every nook and cranny” of Dr. Kali P. Chaudhuri's business history.

Last month, OC Weekly reported Chaudhuri brings more than just $70 million and optimism to the deal. His rsum also includes one of the worst health-care-network meltdowns in California history. Four years ago, just a year after his namesake company (KPC) bought a chain of clinics from MedPartners, Chaudhuri shuttered 81 Southern California locations. The closures left 300,000 patients without care and, in many cases, without medical records. Insurers and doctors scrambled to pick up the pieces. Asked to account for the chain's assets, a bankruptcy judge said the money trail was too complicated to follow.

Chaudhuri has sought to assure everyone that that's history and that he was a victim of forces beyond his control.

“What we accomplished there was a soft crash landing instead of a hard crash landing for everyone involved,” he told the Weekly. “It was beyond me to stop it. In that sense, I was a victim, too.”

But Dunn, whose Central OC district is home to the Tenet hospitals, says he's asked the California Department of Health Services (DHS) to wait on the last step in the escrow process: licensing Chaudhuri's management company, Integrated Healthcare Holding Inc.

Dunn says the delay would allow him and colleague Senator Debra Ortiz, the health-committee chairwoman, to hold a hearing on the matter. They've already scheduled it for sometime after Jan. 1 in Orange County.

“What are his qualifications?” Dunn asked of Chaudhuri. “I'd like to know how DHS determines that. I want to know that everyone on the regulatory side has done everything under the law to insure he has all the criteria for operating these facilities and to assure us all these hospitals do not go the way of another KPC. That kind of failure at the hospital level would deliver a deathblow to my constituents in the inner cities of Orange County.”

Dunn says there's a well-established niche in the business world that specializes in buying out troubled businesses like the Tenet hospitals. “They strip the assets and roll the skeleton over into bankruptcy court,” he said. “I can't say that is what Chaudhuri is doing, but there are some very eerie comparisons.”

The senator doesn't expect much help from the state's Department of Managed Care or from the governor's office, but he says he expects DHS to follow its own criteria in licensing such hospital sales—and he hopes to be in a position to be looking over their shoulder when they do.

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