There's a name for that ailment seen in news photos of rail-thin Third World kids with protruding bellies. It's called "kwashiorkor," and it's seldom ever reported outside famine-stricken regions.

That is, until now. In recent years, two California hospitals have diagnosed an alarming number of Medicare patients with the condition. And the epidemic could soon spread to Rhode Island — at least on paper.

The kwashiorkor spike occurred at two hospitals owned by Prime Healthcare Services, a for-profit company that runs eight medical facilities on the West Coast. And according to a recent report by California Watch, doctors there have perhaps paid more attention to the bottom line than patient care. The non-profit investigative news agency suggests Prime is engaged in "upcoding" — a fraudulent practice in which a patient is wrongly diagnosed with a more serious condition in order to boost Medicare re-imbursements.

Now Prime is hoping to bring its brand of health care to New England, with a $53.5 million bid to buy Woonsocket's Landmark Medical Center, which has been in receivership since June 2008. At this point the only other suitor is another for-profit, Tennessee-based RegionalCare Hospital Partners, with a bid of $70 million. The ongoing legal hearing on the matter picks up again on May 27 in Rhode Island Superior Court.

Prime Healthcare has been hugely successful in California, at least financially. Founder Prem Reddy, a cardiologist who grew up in an impoverished village in India, now out-Trumps Trump when it comes to lavish living. According to a 2007 profile in the Los Angeles Times, he travels by helicopter or chauffeur-driven limo, decorates his homes with garish Lladro porcelain, and equips his bathrooms with gold-plated toilets.

Reddy has built his empire by rejecting the old model in which insurers, looking to contain costs, pay doctors and hospitals a fixed amount for services. After buying a hospital, his company cancels contracts with insurance companies, allowing the hospital to send steeper bills. To keep the system working, Prime relies mostly on emergency-room visits.

The formula works great for Reddy's family, the sole owners of the company, but less so for patients.

When Prime takes over a struggling hospital, it often shuts down less profitable but much-needed services, such as chemotherapy, mental health counseling, and birthing centers. There have also been allegations that indigent patients have been turned away from emergency rooms, a charge the company has denied in the past.

News of Prime's attempted move into Woonsocket has reached California, where Reddy has no shortage of critics. One of them — who calls himself "just a nobody, a concerned citizen" — has bombarded Rhode Island news outlets with unflattering press clippings.

Among the most damning: the Times profile, which includes a quote Reddy has ever since denied. "Why is it in healthcare we expect to have the same?" he allegedly told reporter Daniel Costello. "It's an entitlement mentality. Why aren't the same people asking why everybody shouldn't be eating the same foods, or have the same clothes or same homes? Those are as essential services as healthcare."

Prime Healthcare Services did not return calls to its corporate office this week, but there's a press release on the company website dated January 31 that alleges a smear campaign by the Service Employees International Union, union-friendly politicians, and the media.

"Rather than attacking PHS," the website states, "SEIU and those misinformed politicians should be applauding PHS' efforts to save community hospitals and employing more than 8,000 California workers."

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  Topics: This Just In , Los Angeles Times, Medicare, Woonsocket,  More more >
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