Regulatory Update of Southwest Healthcare System
KING OF PRUSSIA, Pa., April 20 /PRNewswire-FirstCall/ -- Universal Health Realty Income Trust (NYSE: UHT) announced today an update to the previously disclosed regulatory matter related to Southwest Healthcare System ("SWHCS"). As previously disclosed, Universal Health Services, Inc. ("UHS") advised us that, SWHCS, a wholly-owned subsidiary of UHS which operates Rancho Springs Medical Center (the real property of which is not owned by us) and Inland Valley Regional Medical Center ("Inland Valley" the real property of which is owned by us) in Riverside County, California, entered into an agreement with the Centers for Medicare and Medicaid Services ("CMS"). The agreement required SWHCS to engage an independent quality monitor to assist SWHCS in meeting all of CMS' conditions of participation. Further, the agreement provided that during the last 60 days of the agreement, CMS would conduct a full Medicare certification survey. That survey took place the week of January 11, 2010.
UHS received notification from CMS that it intends to effectuate the termination of SWHCS's Medicare and Medicaid provider agreements effective June 1, 2010. SWHCS has commenced discussions with officials from CMS regarding an agreement that will potentially rescind the provider agreement termination action. Should UHS be unable to reach an agreement with CMS, UHS intends to file an administrative appeal with the Department of Health and Human Services and/or pursue other such remedies that may be available to them.
UHS also received notification from the California Department of Public Health ("CDPH") indicating that they plan to initiate a process to revoke SWHCS's hospital license. UHS plans to appeal CDPH's action and SWHCS will remain operational pending the appeal. In that notice CDPH has indicated its willingness to rescind this revocation should SWHCS demonstrate its ability to meet all state licensing requirements.
UHS has informed us that Rancho Springs Medical Center and Inland Valley Medical Center remain fully committed to providing high-quality healthcare to their patients and the communities they serve. UHS therefore intends to work expeditiously and collaboratively with both CMS and CDPH in an effort to resolve these matters although there can be no assurance they will be able to do so. Failure to resolve these matters could have a material adverse effect on UHS and, in turn, us. While the base rentals on Inland Valley are guaranteed by UHS through the end of the existing lease term (December, 2011), should this matter adversely impact the future revenues and/or operating results of SWHCS, the future bonus rental earned by us on Inland Valley, and the underlying value of the property, may be materially adversely impacted. Bonus rental revenue earned by us from Inland Valley amounted to $1.1 million during the year ended December 31, 2009.
Universal Health Realty Income Trust, a real estate investment trust, invests in healthcare and human service related facilities including acute care hospitals, behavioral healthcare facilities, rehabilitation hospitals, sub-acute care facilities, surgery centers, childcare centers and medical office buildings. We have fifty-two real estate investments in fifteen states.
This press release contains forward-looking statements based on current management expectations. Many of the factors related to these issues are beyond our ability to control or predict. These statements are subject to risks and uncertainties. Readers should not place undue reliance on such forward-looking statements which reflect management's view only as of the date hereof. We undertake no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise.
SOURCE Universal Health Realty Income Trust
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