Calif. AG Holds Public Hearings Over Sale of Safety-Net Hospitals

The California Office of the Attorney General is holding public hearings every day this week over the contentious sale of six safety-net hospitals to Prime Healthcare Services, the Inland Valley Daily Bulletin reports (Nisperos, Inland Valley Daily Bulletin, 1/6).

Background

The six hospitals -- which are run by not-for-profit Daughters of Charity Health System -- for sale are:

• O'Connor Hospital in San Jose;
• Saint Louise Regional Hospital in Gilroy;
• Seton Coastside Hospital in Moss Beach;
• Seton Medical Center in Daly City;
• St. Francis Medical Center in Los Angeles County; and
• St. Vincent Medical Center in Los Angeles County.

The sale is pending approval by State Attorney General Kamala Harris (D), who has until Feb. 11 to approve or void the deal.

As part of the deal, Prime said it would spend about $150 million to bolster the health system's facilities, protect about 7,600 jobs and assume more than $300 million in pension guarantees (California Healthline, 12/12/14).

The potential acquisition has sparked debate among unions.

The California Nurses Association has said the sale is necessary for the hospitals to remain open (Colliver, San Francisco Chronicle, 1/6). Meanwhile, the Service Employees International Union has been leading a charge against the sale, as public pressure to reject it has been increasing (California Healthline, 12/12/14).

Prime Agrees to Most Conditions of Sale

In addition to the conditions set forth by the Daughters health system when Prime submitted its bid for the acquisition, Prime now has agreed to most of the terms suggested by the attorney general's office, the San Jose Mercury News reports (Seipel, San Jose Mercury News, 1/5).

A state consultant's report released in December 2014 suggested that Prime operate the facilities as general acute care hospitals for at least 10 years and participate in the Medi-Cal managed care program. Medi-Cal is the state's Medicaid program.

However, Prime expressed concern over these terms, noting that it would be "hamstrung" if it is required to accept Medi-Cal managed care reimbursement rates that are lower than those of other hospitals.

In addition Prime said the condition to operate the facilities as general acute care hospitals for at least 10 years was an unprecedented and unfair recommendation (Early/Seipel, San Jose Mercury News, 1/7). According to the Mercury News, Prime is seeking "further clarification" on the recommendations (San Jose Mercury News, 1/5).