California’s Attorney General’s now has until Feb. 20 to approve or kill the sale of the Daughters of Charity Health System to Prime Healthcare—a debate that has fractured communities and a union.
Attorney General Kamala Harris was to decide by Feb. 6. The deadline was extended by two weeks for the binding decision on whether the DCHS will be allowed to sell six facilities, including Saint Louise Regional Hospital in Gilroy and De Paul Medical Center in Morgan Hill, to Prime Healthcare.
Deputy Attorney General Wendi Horwitz, who chaired a public hearing on the matter in Gilroy on Jan. 8, sought the extension from Robert Issai, CEO of the Daughters of Charity.
“She needed more time to finish her recommendation and I was more than happy to grant that extension,” Issai told the Dispatch.
“I want her to look at all the facts and all the material, and since she has been inundated with thousands of pieces of material, it wasn’t a worry for me.”
Horwitz hosted public hearings up and down the Golden State in January, and overflow crowds of hospital employees, patients and concerned citizens flooded her office with comments. More than 100 crammed into Gilroy City Hall Jan. 8 for a hearing that lasted the better portion of the day.
Harris can approve or reject the sale, or approve it with conditions.
But if she comes down against the sale to Prime, a for-profit firm based in Ontario, Issai foresees bankruptcy. A bankruptcy attorney has been developing a contingency plan if the sale falls through, he said.
“This is not a scare tactic,” Issai said. “As a CEO, the worst thing on my record would be to take a company into bankruptcy. If the attorney general says no, our access to liquidity will be cut off.”
If the sale isn’t approved by March 31, and if the transaction doesn’t close by mid-May, the Daughters of Charity would have “no other choice but to go into bankruptcy,” Issai said.
“We would opt to have a controlled bankruptcy instead of a freefall,” he added.
While the California Nurses Association supports the sale, the Service Employees International Union-United Healthcare Workers is fighting the for-profit takeover.
Instead of Prime, DCHS should have gone with a bid from New York-based private equity firm Blue Wolf Capital, the union has said.
“(Blue Wolf’s bid) dedicates $300 million to capital improvements—twice as much as Prime Healthcare, is more securely funded, will continue the historic community mission of the hospitals,” a union press release reads. “(It) will preserve workers’ pensions in a way that saves the system money without reducing benefits.”
In December, a month after DCHS officials announced Prime as the choice bidder, dozens of California elected officials, including U.S. representatives Mike Honda (D-San Jose) Zoe Lofgren (D-San Jose), opposed the sale to Prime in a letter to Harris.
Issai said opposition from California lawmakers is more about garnering union support than anything.
“(Blue Wolf) has no experience running hospitals in California or any structure to take six hospitals and run them,” he said. “They try to use the only currency they have, which is the SEIU-UHW, to extort and threaten.”
SEIU-UHW members argue that Prime’s for-profit model is incompatible with the Daughters of Charity’s tradition of providing care to the poor, regardless of their ability to pay.
