Seton Medical Center

AG approves sale of hospitals: Kamala Harris’ decision requires Prime to operate five of the six for at least 10 years

--By Don Thompson and Juliet Williams, The Associated Press, published in the San Mateo Daily Journal on Feb. 21, 2015. 

Attorney General Kamala Harris approved the sale of six nonprofit Catholic hospitals to a for-profit corporation on Friday, while imposing conditions that could unravel the deal.

Harris approved the sale of hospitals operated by Daughters of Charity Health Systems in the Los Angeles and San Francisco Bay Area to Prime Healthcare Services Inc. By law, Harris’ office must approve purchases of nonprofit hospitals by for-profit companies.

The hospitals are struggling financially, and a union representing workers is concerned Prime will shut some or all of them. Under its purchase agreement, Prime promised to keep them operating at least five years.

But Harris’ decision requires Prime to operate five of the six for at least 10 years, and imposes other “strong conditions to ensure continued community access to essential healthcare services,” said a news release from her office.

Harris’ conditions “are extensive, and many are unprecedented,” Prime Healthcare said in a statement. The two health care systems “will need to evaluate the viability and future stability of the DCHS hospitals under these conditions.”

Daughters of Charity said it was pleased with Harris’ decision, citing Prime’s “tremendous experience in reviving struggling hospitals.”

The decision on the sale inserted Harris, a Democrat, into a battle between two influential labor unions just as she begins campaigning and fundraising for the U.S. Senate seat being vacated by Barbara Boxer.

The California Nurses Association supported the sale, arguing that a deal with Prime is the best way to keep the hospitals open. Association executive director RoseAnn DeMoro urged Prime to comply with Harris’ conditions.

But United Healthcare Workers West opposed the deal, expressing concern that Ontario-based Prime would shut down the hospitals if it took control. The union also noted Prime has long faced criticism over its billing practices and patient privacy.

Harris’ conditions require Prime to revise its debt-collection practices.

Union President Dave Regan said in a statement that Harris’ conditions would protect community health care and services, but questioned if Prime will live up to the requirements.

Both unions have tens of thousands of members in California and have given to Harris’ campaigns in the past.

The California Nurses Association gave Harris $13,900 for her 2010 campaign for attorney general and $7,500 for her re-election campaign last year. United Healthcare Workers gave the maximum contribution for Harris’ 2014 re-election campaign, $27,200.

The six hospitals involved in the pending sale are O’Connor Hospital in San Jose, Saint Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City, Seton Coastside in Moss Beach, St. Francis Medical Center in Lynwood and St. Vincent’s Medical Center in Los Angeles.

Harris’ decision requires Prime to operate St. Francis, O’Connor, Saint Louise and Seton Medical Center for 10 years. It requires Prime to run Seton Coastside as a skilled nursing facility. St. Vincent has a five-year requirement.

Some of the requirements track the agreement between the two health care systems. Prime already agreed to assume about $350 million in pension debt, retire about $400 million in other debts and liabilities, spend $150 million on upgrades and keep as many of the 7,600 jobs as possible.