Logan Reid
Avanti Hospitals LLC was purchased by a group of investors in 2008, who then renamed the company Avanti Hospitals. The company was acquired by two of its original investors, Nick Orzano and Mark Bell, in 2019, who renamed it Pipeline Health. The new owners aimed to apply Avanti's business model to hospitals in other states, with their first purchase being City Hospital at White Rock in Dallas. Avanti Hospitals primarily provided basic emergency care services, without the costly high-level trauma centers or highly specialized advanced surgery programs offered by other health systems. Last week, Pipeline Health, the operator of seven safety-net hospitals, filed for Chapter 11 bankruptcy protection.
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What You'll Learn
Avanti Hospitals LLC paid $8.1 million in illegal kickbacks
On December 28, 2018, the Department of Justice announced that Los Angeles-based Avanti Hospitals LLC and six of its owners would pay the federal government $8.1 million to settle claims that they violated the False Claims Act. The allegations stated that Avanti Hospitals LLC submitted false claims to Medicare and Medicaid programs for medical services referred by a physician who received kickbacks and other improper payments from Gardena and other Avanti affiliates. Avanti Hospitals LLC allegedly caused its subsidiary, Memorial Hospital of Gardena, to submit these false claims.
The Anti-Kickback Statute and the Physician Self-Referral Law, or Stark Law, were both violated by these payments, according to the government. The Stark Law prohibits hospitals from billing Medicare for specific services referred by doctors with whom the hospital has an improper compensation agreement. Both laws aim to ensure that physicians' medical judgments are not influenced by improper financial incentives and are instead based solely on patients' best interests.
The settlement resolved allegations that Avanti, Gardena Hospital, and at least two other Avanti affiliates compensated a physician they engaged as a medical director in a way that exceeded the fair market value for his services and incentivized him to refer patients to Gardena Hospital. Avanti and Gardena Hospital entered into a corporate integrity agreement with the Department of Health and Human Services Office of Inspector General (HHS-OIG) as a result of the settlement.
The original lawsuit was filed by Dr. Joshua Luke, the former CEO of Gardena Hospital, under the False Claims Act's whistleblower provisions. The case was docketed as U.S. ex rel. Luke, State of California ex rel. Luke v. Gardena Hospital, L.P. DBA Memorial Hospital of Gardena, Avanti Hospitals, LLC, et al., CV 15-08732 FMO (C.D. Cal.) (PARTIALLY UNDER SEAL).
Avanti Hospitals was established in 2008 by a group of investors who purchased two financially struggling safety net hospitals in Los Angeles County: Memorial Hospital of Gardena and East Los Angeles Doctors Hospital. The investors aimed to turn the hospitals around by applying a business model focused on providing basic emergency care services and controlling costs.
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Avanti's business model
In 2008, a group of investors purchased two financially underperforming safety net hospitals in Los Angeles County—Memorial Hospital of Gardena and East Los Angeles Doctors Hospital. The investors named the new company Avanti Hospitals. Avanti's business model focused on providing mostly basic emergency care services. They did not have costly high-level trauma centres or highly specialised advanced surgery programs. This allowed Avanti to keep costs low, as their hospitals did not require many high-priced specialty surgeons or academic researchers.
Two more local hospitals soon joined the Avanti network: Community Hospital of Huntington Park in 2010 and Coast Plaza Hospital in Norwalk in early 2011. In 2012, Avanti reached a sale-leaseback deal involving the sale of real estate under three of its four hospitals for $86 million.
In 2017, two of the original Avanti investors, Nick Orzano and Mark Bell, started a new venture called Pipeline Health. Their goal was to replicate Avanti's business model in hospitals in other states. Their first purchase was City Hospital in Dallas, and they soon acquired two more hospitals in the Chicago area. In 2019, Orzano and Bell bought out the other Avanti investors and renamed the entire company Pipeline Health.
Pipeline Health operates a system of "safety net" hospitals that provide care for mostly low-income Medicaid patients in historically underserved communities. Despite the challenges of the Covid-19 pandemic, Pipeline Health has expanded to seven hospitals across three states and is looking to resume its expansion efforts.
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Coast Plaza Hospital acquired by Avanti in 2011
Coast Plaza Hospital is a 117-bed acute care hospital that has been providing high-quality medical services to Norwalk and the surrounding areas of Southeast Los Angeles County for over 55 years. The hospital was acquired by Avanti Hospitals in 2011 and is fully accredited by The Joint Commission. It is also a licensed provider for Medicare and Medi-Cal, along with many HMOs, PPOs, and managed care organizations.
The acquisition of Coast Plaza Hospital by Avanti Hospitals in 2011 was a significant step for the company. Avanti, which was established in 2008 by a group of investors who purchased two financially underperforming safety net hospitals in Los Angeles County, Memorial Hospital of Gardena and East Los Angeles Doctors Hospital, aimed to turn around these hospitals and provide quality healthcare services. By acquiring Coast Plaza Hospital, Avanti expanded its presence in Los Angeles County and strengthened its commitment to delivering innovative and accessible healthcare to the community.
Joel Freedman, Avanti's President, expressed his pleasure with the acquisition, stating, "Coast Plaza Hospital, its medical staff, and its employees have a long-standing tradition of providing high-quality healthcare services in a patient-focused environment. We are pleased to have the opportunity to build on the great legacy of community support that has already been established by Coast Plaza Hospital." Freedman also emphasized Avanti's mission to create a hospital system that excels in quality care, operational efficiency, patient satisfaction, financial strength, and community contribution.
The addition of Coast Plaza Hospital to Avanti's network demonstrated its alignment with Avanti's strategic vision. Avanti focused on providing mostly basic emergency care services, avoiding the high costs associated with specialized trauma centers or advanced surgery programs. By joining Avanti, Coast Plaza Hospital gained access to a larger network of resources and expertise, enabling it to enhance its service offerings and better serve the healthcare needs of the Norwalk community and its surrounding areas. The acquisition ensured uninterrupted access to healthcare for patients, maintaining the same level of excellence in basic and emergency services that Coast Plaza Hospital was known for.
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Avanti investors Nick Orzano and Mark Bell
In 2008, a group of investors purchased two financially struggling hospitals in Los Angeles County, the Memorial Hospital of Gardena and the East Los Angeles Doctors Hospital. The new company was named Avanti Hospitals. Avanti's hospitals provided mostly basic emergency care services, allowing them to keep costs relatively low.
In 2017, two of the original investors in Avanti Hospitals, Nick Orzano and Mark Bell, founded Pipeline Health. The company aimed to replicate Avanti's business model in hospitals in other states. Their first purchase was the City Hospital at White Rock in Dallas, which was completed in 2018. This was followed by the acquisition of two hospitals in the Chicago metro area. In 2019, Orzano and Bell bought out the other Avanti investors and renamed the entire company Pipeline Health.
Pipeline Health, an operator of seven safety-net hospitals, filed for Chapter 11 bankruptcy protection in October 2022. Through their experience running hospital-based physician practices and owning systems of hospitals, Orzano and Bell have continued to push toward a better way forward in healthcare.
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Avanti Hospitals basic emergency care services
Avanti Hospitals was established in 2008 when a group of investors purchased two financially underperforming safety net hospitals in Los Angeles County, namely Memorial Hospital of Gardena and East Los Angeles Doctors Hospital. Two more hospitals joined the Avanti network in 2010 and 2011, respectively. These were Community Hospital of Huntington Park and Coast Plaza Hospital in Norwalk.
From the beginning, Avanti Hospitals provided mostly basic emergency care services. They did not have costly high-level trauma centres or highly specialised advanced surgery programs. This allowed Avanti to keep costs relatively low, as their hospitals did not have many high-priced specialty surgeons or academic researchers on staff. Avanti's business model focused on providing care for mostly low-income Medicaid patients in historically underserved communities.
In 2017, two of the original Avanti investors, Nick Orzano and Mark Bell, started a new venture called Pipeline Health. Their intention was to apply Avanti's business model to hospitals in other states. In 2019, Orzano and Bell bought out the other Avanti investors and renamed the company Pipeline Health.
Today, Pipeline Health continues to operate a system of hospitals that provide safety net care, including basic emergency services, to underserved communities.
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Frequently asked questions
A group of investors purchased the hospitals in 2008.
The two hospitals were named Memorial Hospital of Gardena and East Los Angeles Doctors Hospital.
The hospitals were financially underperforming, and the investors wanted to turn them around.
The investors named the new company Avanti Hospitals. Two more hospitals, Community Hospital of Huntington Park and Coast Plaza Hospital, joined the network in 2010 and 2011, respectively. In 2017, two of the original investors, Nick Orzano and Mark Bell, started a new venture called Pipeline Health. They purchased hospitals in Dallas and the Chicago metro area and later renamed the entire company Pipeline Health. In 2022, Pipeline Health filed for Chapter 11 bankruptcy protection.
