Attorney General Kamala Harris approves sale of Daughters of Charity Hospitals to Prime Healthcare (updated)

Attorney General Kamala Harris has granted conditional approval of the sale of Daughters of Charity Hospitals to Ontario-based Prime Healthcare. The approval includes conditions to ensure continued community access to healthcare services including keeping some services for at least ten years.

The controversial sale has been at the center of a battle that included union rallies for the sale, union protests against the sale and town hall meetings across the state for months. The sale includes St. Vincent in Los Angeles and St. Francis in Lynwood.

Harris, who is running for the U.S. Senate, did not comment on her decision.

Political experts predicted politics would play a role in the decision given her run for Congress and expected her to try to find a middle ground for all parties involved. Harris' office said the requirements of the law, not politics, would dictate her review.

The conditions of the sale include continued participation in Medi-Cal and Medicare programs, providing reproductive health care services, a ten-year commitment for emergency services at some of the hospitals and guarantees for all pension obligations.

There is no time set for Prime Healthcare to accept or reject the conditions of the sale.

Prime’s Director Government Relations Fed Ortega said Prime is “thankful” for the approval and “remains committed to ensuring a future for the hospitals.”

In a statement Prime said: "The conditions imposed on this sale by the Attorney General are extensive and many are unprecedented, including maintaining four hospitals as acute care hospitals and a fifth as a skilled nursing facility for a minimum of ten years.  Prime Healthcare, with DCHS, will need to evaluate the viability and future stability of the DCHS hospitals under these conditions."

This week Prime Healthcare was found in contempt of court by a San Bernardino Superior Court Judge for needlessly admitting emergency room patients into its Chino hospital, in violation of a previous court order.

For SEIU United Health Workers West – which led opposition to the sale – the conditions of the sale are considered a victory. Without them, the Union believes Prime would close critical units and reduce the workforce.

"If Prime lives up to both the letter and spirit of the conditions placed on this sale, community healthcare and services for low-income families will be protected, but given our history with Prime, that’s a big if," said Dave Regan, president of SEIU-UHW.

The California Nurses Association has supported the sale with months of rallies and now hopes Prime will agree to the conditions. They argued that without the sale the hospitals, which serve low-income communities, would close.

"We would hope that Prime will comply with these conditions which will keep the hospitals open just as nurses, nuns, patients and community residents have rallied to achieve," said CNA Executive Director RoseAnn DeMoro. "We urge the Attorney General to call on all California hospitals to meet the same standards, and for the California Hospital Association to embrace these standards and insist that all of its member hospitals meet the same criteria."

Local elected officials and some community and health advocates in the communities with Daughters of Charity hospitals say they are still concerned about the accessibility of healthcare for the communities these hospitals serve.

“I remain gravely concerned about Prime’s ability to carry out DCHS’s mission of serving the poor and working on behalf of the community given the company’s history of cutting services, eliminating patients’ insurance contracts, raising prices, and laying off workers at hospitals it acquires,” said Assemblyman Anthony Rendon (D-Lakewood) in a statement.

In Santa Clara County, home to two of the Daughters of Charity hospitals, leaders said they are disappointed about the decision. They said the conditions do little to protect residents and said the decision "jeopardizes the health of the County's neediest and most vulnerable residents."

County officials there said they plan to explore buying medical facilities to provide services for low-income residents.

The Attorney General is required to weigh in on sales that involve non-profit healthcare facilities. Under California law Harris reviewed a wide range of criteria including if the non-profit was selling for fair market value to if the sale was in the public interest.

Here are some of the terms of the conditional decision:

• Prime must operate St. Francis, and several other hospitals in the Bay Area, as acute care hospitals and offer emergency services for ten years.
• Prime must be certified to participate in Medi-Cal and Medicare programs and have or maintain Med-Cal managed care contracts at each of the hospitals.
• Prime must provide essential health care services including reproductive health care services at all the hospitals.
• Prime must invest $150 million in capital improvement expenditures at the facilities over the next 3 years.
• Prime assumes and guarantees all pension obligations for current and retired employees.