Welcome to the "Lessons from the C-suite" series, featuring Managing
Partner Eric Larsen's conversations with the most influential leaders
in health care.
In this edition, Prem Reddy, chair, president, and CEO of
Prime Healthcare, tells Eric about his system's approach to working with health plans,
how he became known as a turnaround expert, and why leadership is in his DNA.
Q: Dr. Reddy, you have 43 hospitals in 14 states and 43,000 employees.
Prime is the fastest-growing health care system in the country, as
Modern Healthcare pointed out last year, and the fifth largest for-profit system by hospital
count. You've taken bets on acquiring distressed and bankrupt hospitals
that others have passed over. How have you made these acquisitions work?
Prem Reddy: My experience with Desert Valley, the hospital I built, gave me a level
of confidence that I could turn around a failing hospital. Desert Valley
was sold, along with my physician practice management (PPM) company, to
PhyCor. PhyCor declared bankruptcy soon after that. At the time, I was
very disappointed with myself. This was my only experience building a
hospital from the ground up, and I felt that I had failed.
In December 2000, the doctors at Desert Valley called to ask me to come
back. I pooled all my money and borrowed money and bought it back. From
2001 to 2003, I worked as a physician, as a medical director, as a cardiologist.
It was a mess at that time, but Desert Valley eventually did extremely well.
Later, a group of doctors 30 miles away bought a hospital when it was in
distress, and then it failed and went into bankruptcy. They asked me to
purchase the hospital through bankruptcy and turn it around. And then
a third hospital in bankruptcy came to me. That's how I became a turnaround
expert of hospitals.
Now, we get at least a few calls a week. We can't help everyone, but
concentrate on those we can help.