Tenet Healthcare Agrees to Conditions to Purchase Daniel Freeman Hospitals

Tenet Healthcare Corp. has agreed to the conditions set by Attorney General Bill Lockyer (D) for the purchase of Daniel Freeman Hospitals, the last not-for-profit hospitals in Inglewood and Marina del Rey, the Los Angeles Times reports. Lockyer, who has the authority to block deals that would switch not-for-profit facilities into for-profit hospitals, last week said the deal would be approved only if Tenet agreed to 21 conditions that ensure the hospitals continue providing services that not-for-profit hospitals "typically offer" (Bernstein, Los Angeles Times, 12/12). In particular, Lockyer said he would only approve the sale "if Tenet agreed to provide charity care" at the facilities at a cost of $2 million per year for seven years. The conditions also stipulate that Tenet operate the emergency room at Daniel Freeman Memorial Hospital, Inglewood campus, for five years and maintain operations at the emergency room of Inglewood's Centinela Hospital Medical Center for the same period. Lockyer also "demanded" that Tenet "make sure that the ratio of nurses to patients was in keeping with standards being developed" under a new state law (California Healthline, 12/10). Tenet officials had indicated initially that they might "drop the deal" because of the "onerous" conditions, but yesterday the company agreed to meet the requirements. Tenet spokesperson Harry Anderson said, "This has been a very long, arduous and political process. We're not happy with the conditions, but we believe we can still make a difference there." He added the deal would "probably close Monday." The $55 million deal gives Tenet control of 17% of the hospital market in Los Angeles and Orange counties.

The sale highlights the "vigorous debate" over whether private hospital companies provide the same level of service that not-for-profit hospital companies offer, the Los Angeles Times reports. For example, when Tenet purchases a hospital, it usually "shores up" the cardiology, orthopedics, neurology, oncology and maternity services, which are considered to be "money makers." Community activists maintain that pediatrics and emergency and trauma services, which are expensive and not reimbursed well, will be shut down. In the Daniel Freeman deal, Lockyer did not ask enough of the "profitable" Tenet, advocates say. The Rev. Michael Place, president and CEO of the Catholic Health Association of the United States, said, "We are placing our community hospitals at great risk. As a country, we do not realize the vulnerability of health care delivery" (Los Angeles Times, 12/12).