Sale of Four Hospitals to O.C. Firm a Step Closer

The state Department of Health Services announced Friday that it would issue operating licenses to a Costa Mesa company buying four Orange County hospitals whose sale was delayed by questions involving one of the chief investors.

The approval came after state regulators signed off on a decision by Integrated Healthcare Holdings Inc. to remove Hemet surgeon Dr. Kali P. Chaudhuri as a majority owner and replace him with a group of Orange County doctors led by Dr. Anil Shah of Santa Ana.

The doctors will provide $30 million toward the $70-million sale of the hospitals by Tenet Healthcare Corp.

Chaudhuri’s involvement in the deal sounded alarms with local doctors and health advocacy groups because of his track record with a string of failed medical clinics. In 1999, he bought and then closed a chain of clinics, shutting 38 clinics that served 300,000 patients across Southern California, including 56,000 in Orange County. He also invested in other medical clinics that failed in 2001 and 2002.

The four Tenet hospitals for sale handle a quarter of the county’s emergency room visits and house one of its three trauma centers. Doctors at Western Medical Center-Santa Ana, the trauma center hospital, asked county officials in November to block the sale to Chaudhuri, fearful of his track record.

Chaudhuri has options to own up to 25% of the business in two years and will own 49% of the land on which the hospitals sit.

The other hospitals to be sold are Western Medical Center-Anaheim, Coastal Communities Hospital in Santa Ana and Chapman Medical Center in Orange.