California Atty. Gen. Kamala D. Harris on Friday approved the hotly debated sale of a chain of six struggling Catholic hospitals — including two in Los Angeles County — but imposed strict conditions on how they will be managed.
Prime Healthcare Services Inc. of Ontario said it would need days to review Harris’ ruling before deciding whether to proceed with the purchase.
Harris said she would require Prime Healthcare to keep all of the hospitals open for 10 years — including four of them as acute-care hospitals — and insisted they provide the same level of charity care to indigent patients as Daughters of Charity had.
Dr. Kavitha Reddy Bhatia, vice president of clinical transformation for Prime Healthcare, said the requirement to keep the hospitals open so long in the face of an ever-changing industry “has never been imposed on any other hospital acquisition in California history.”
“We will do a careful analysis and hope to reach a decision within a week,” said Bhatia.
The closely watched sale has been a hot-button issue across California for months, with more than 7,600 jobs and vital healthcare services to a number of lower-income communities hanging in the balance.
In October, Prime Healthcare agreed to pay about $843 million in cash and assumed debt to acquire the six hospitals. A key part of the agreement was Prime Healthcare’s promise to assume $300 million of liability for the pensions of 17,000 current and former Daughters of Charity employees.
The proposed sale quickly drew strong opponents and supporters. Some unions and elected officials had lobbied Harris to block the sale, saying Prime Healthcare was more concerned with profits than treating the sick and poor. Those who backed the sale noted Prime Healthcare’s history of saving troubled hospitals and said the company was the best option to save the struggling Catholic hospitals.
Meanwhile, Santa Clara County government was disappointed by the decision. Two of the six Daughters of Charity hospitals are in that county: one in San Jose, one in Gilroy.
“Regardless of the conditions placed upon Prime Healthcare, the county believes that the decision jeopardizes the health of the county’s neediest and most vulnerable residents by reducing their access to critical medical services,” the county said in a statement.
The Daughters of Charity hospital chain, reportedly losing more than $10 million per month, said it probably would file for bankruptcy protection and slash services if the deal was not approved. Executives remained optimistic shortly after Harris’ conditional approval of the sale.
The story comes from an February 20 LA Times article by Stuart Pfeifer and Javier Panzar.