COLUMBIA/HCA: Alexian Swap Opponents File Lawsuit
Opponents of Columbia/HCA Healthcare Corp.'s deal to swap two of its Chicago-area hospitals with Alexian Brothers' San Jose Hospital have filed a lawsuit seeking to "block the acquisition." The San Jose Business Journal reports that former state Attorney General Dan Lungren (R) last month approved the deal, under which "the Alexian brothers will give Columbia its San Jose hospital and up to $284 million" for the two facilities in Chicago "and $30 million in cash." The lawsuit, filed Dec. 31 by San Jose attorneys Ingo Brauer and David Cortese and assisted by representatives from the California Nurses Association and People Acting in Community Together (PACT), accuses Lungren of "protecting corporate interest rather than the public interest" in his decision to approve the deal. In addition, the suit charges that "the Alexian hospital's board of directors breached its fiduciary duty to the community by not seeking other bids for the facility."
For The Love Of Money?
The Business Journal reports, however, that some health care experts "doubt whether other bidders would have affected the outcome" and whether cost-effectiveness was the main issue. "These were two small hospitals trying to serve the same market, both looking down the barrel at major capital investments," said Paul Estess, business development director at San Jose Medical Center. The Business Journal notes that in acquiring the Alexian facility, Columbia obviated the need to spend up to $100 million for seismic retrofits at its nearby San Jose facility. Further, the deal ensures that Alexian "no longer [has] an orphaned outpost far from their other Midwestern facilities." Leslie Kelsay, community relations director at Alexian Brothers Hospital, said, "Cost effectiveness was really not the issue. (It was) the desire to have the Brothers working together as closely as possible." The Business Journal reports that since opponents of the deal are "stymied in their efforts" in California, they are turning to Illinois officials, who hold "final approval over the swap" (Delevett, 1/11 issue). Click here for previous coverage of the Columbia-Alexian deal.