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Crews install a new sign at the renamed Santa Cruz Valley Regional Hospital after it emerged from bankruptcy last year. The hospital is countersuing a doctors group for breaching its contract with SCVRH, failing to act in good faith, and interfering with the hospital’s contractual and business relations.

Santa Cruz Valley Regional Hospital has filed a counterclaim against the doctors group that claimed in a lawsuit last year that the hospital owes it more than $1.9 million.

According to the hospital’s counterclaim, Global Hospitalist Solutions breached its contract with SCVRH, failed to act in good faith, and interfered with the hospital’s contractual and business relations.

GHS signed a contract in January 2018 to care for in-patients and signed an additional contract in August 2018 to handle the hospital’s emergency room. The doctor’s group filed a lawsuit in Pima County Superior Court in December alleging the hospital owed the group just over $1.9 million in unpaid invoices. According to the lawsuit, when the unpaid invoices were brought up, the hospital announced it was terminating its contract.

The group further alleged it had to stop providing services a month before that contract was up due to lack of payment. According to GHS' lawsuit, the hospital never raised issues about the quality of services provided by GHS.

SCVRH denied owing GHS $1.9 million in a response and counterclaim filed in Pima County Superior Court in late January.

Moreover, SCVRH states it did have concerns about GHS’ performance and service delivery due to slow response times, unprofessional behavior and clinical decisions pertaining to specialty consultations. There were also concerns GHS providers often weren’t on-site, making it difficult to obtain consultations in a timely manner, according to the counterclaim.

The hospital further alleges that it was often unable to bill patients because at least five GHS physicians and three mid-level providers were not enrolled as contracted physicians with Medicare and other specific third-party payers. Moreover, the hospital said GHS left 355 patient files incomplete and unsigned from Nov. 1 through Dec. 31, again making it impossible to bill patients.

SCVRH claims GHS “caused the hospital substantial reputational harm, lost and diverted business opportunities and the inability to bill and collect for services rendered.”

The hospital alleges that after it terminated the group’s contract, GHS agreed to continue providing services until mid-February, and also agreed to accept installment payments for outstanding invoices but then reversed course and demanded payment in full by Dec. 31.

“SCVRH could not incur the risk that the hospital would be without ED or hospitalist coverage should GHS make good on its threat,” and so made arrangements to engage new health care providers who would start Jan. 31, the counterclaim states.

Although the hospital had hoped for a seamless transition, the counterclaim alleges GHS began transferring certain hospital patients to other facilities, further affecting the hospital’s revenue stream and reputation.

Glenn Hotchkiss, who represents GHS, did not return a phone call seeking comment on the counterclaim. However, Hotchkiss filed a response in Pima County Superior Court on Feb. 13, denying all of the allegations lodged by SCVRH. In many instances, he alleges “the terms of the hospitalist agreement speak for themselves and must be read as a whole.”

Santa Cruz Valley Regional Hospital, which opened as Green Valley Hospital in May 2015, filed for bankruptcy in April 2017. In February 2018, U.S. Bankruptcy Court in Phoenix approved the purchase of the hospital by Lateral GV, an offshoot of California-based Lateral Investment Management, the lone bidder on the property. The bankruptcy case was finalized July 25.

In interviews last month, medical professionals and others associated with the hospital claim the hospital continues to suffer from financial problems. They said the ICU was closed up to 42 days from August to Dec. 31, because of a lack of qualified nurses.

Hospital CEO Kelly Adams acknowledged last month the hospital owes money to vendors but said it is “financially solvent,” patients continue to receive exemplary care, and supplies on hand are “adequate.”

Adams said the ICU has only been closed for a few days at most and it was due to a lack of patients during the summer.

Adams is founder and partner of ERH Health Care, a Salt Lake City company that helps underperforming and distressed healthcare organizations. He was brought in last summer as the hospital's fourth CEO.

Allegations about patient care being compromised and a lack of supplies are not true, Adams said. He acknowledged the hospital is behind on some bills but said he anticipated being caught up by early March. The hospital switched to a new electronic medical records system in November, which resulted in bills being processed late and a slowdown in revenue, he said.

Kim Smith | 547-9740

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