Citing “unfair business practices” as their biggest concern, 18 California lawmakers urged California Attorney General Kamala Harris to reject the sale of six hospitals in the Daughters of Charity Health System to Prime Healthcare Services. That includes Gilroy’s Saint Louise Regional Hospital.
U.S. representatives Mike Honda (D-San Jose) and Zoe Lofgren (D-San Jose) spearheaded the effort in which a Dec. 11 letter addressing their concerns over the sale to the controversial for-profit healthcare system was sent out to the attorney general’s office. The group asks Harris to reject the transaction.
“It is our belief that under Prime, patient care and healthcare worker rights will suffer at these hospitals,” the letter states.
Lofgren represents the 19th U.S. Congressional district, which includes Morgan Hill.
The letter goes on to note that Prime’s history of unfair business practices “have resulted in civil and criminal investigations by government agencies for allegedly overbilling Medicare as well as violations of patient confidentiality.” Furthermore, California’s need for additional safety net hospitals as a result of the expanded Medi-Cal services provided under the Affordable Care Act “is incompatible with Prime’s business model of minimizing the amount of care it delivers to low-income patients.”
The highly-scrutinized DCHS sale to Prime has supporters in the California Nurses Association, which worked out a one-year agreement with the new owners that came with full pension assurances prior to the acquisition.
However, the SEIU-United Healthcare Workers West have campaigned against the sale to Prime even before it was announced in early October. The union believes “Prime puts profits over patients and doesn’t share Daughters’ mission of serving the poor,” according to an SEIU-UHW press release.
The Dec. 11 letter from lawmakers also joins Santa Clara County officials in the chorus of concerns over the pending sale, which requires approval from the attorney general’s office and the Vatican before it becomes final.
“We are not going to roll over and risk watching Prime Healthcare cut services, raise prices and layoff caregivers like they’ve done in so many other communities in California and other states,” SEIU-UHW President Dave Regan said.
Prime Healthcare founder, President and Chief Executive Officer Prem Reddy has stood firm that the hospital chain he founded will infuse $150 million in capital improvements at the DCHS facilities, protect 7,600 jobs and assume more than $300 million in pension guarantees for more than 17,000 union and non-union active and retired workers.
DCHS officials have also said the hospitals, including SLRH, are in danger of closing if the attorney general does not approve the sale to Prime, which they have said was the only viable bidder for the system which went up for sale in January.
The congressional representatives who penned the Dec. 11 letter are not convinced, however. Prime Healthcare Services has a history of cutting services, raising prices, and laying off workers. The questionable history of Prime Healthcare combined with the mission of these hospitals to serve the most needy residents raises doubts as to the sensibility of the sale, according to the Dec. 11 press release from Honda’s and Lofgren’s offices
Harris may reject the sale based on any factors found relevant, including whether the sale is in the public interest; whether it would create significant effects on the availability of health care services in the community; or whether the proposed use of the proceeds from the transaction is consistent with the charitable trust under which the hospitals have operated.
Harris’ office has blocked two of four potential sales of hospitals involving Prime Healthcare, including its attempt to purchase Victor Valley Community Hospital in Victorville in 2011.
The attorney general is given an initial 60-day review window on transactions and, in cases of multi-facility sales, Harris can opt for an additional 45-day extension. The Charitable Trusts Division, which focuses on nonprofits and charities conducts the review process. In the last four years, the division has conducted 20 to 30 such reviews.
Reps. Honda and Lofgren were joined by Representatives Sam Farr (D- Carmel), Mark Takano (D- Riverside), Janice Hahn (D- San Pedro), Anna G. Eshoo (D- Palo Alto), Lucille Roybal-Allard (D- Los Angeles), Xavier Becerra (Los Angeles), Doris O. Matsui (D- Sacramento), Tony Cardenas (D- San Fernando Valley), Jackie Speier (D- San Francisco/San Mateo Counties), Barbara Lee (D- Oakland), Loretta Sanchez (D- Garden Grove), Juan Vargas (D- San Diego) Mike Thompson (D- St. Helena), George Miller (D- Martinez), Alan Lowenthal (D- Long Beach), and Maxine Waters (D- Los Angeles).
“In closing, we do not believe an acquisition of Daughters of Charity hospitals by Prime is in the best interests of patients or healthcare workers in California,” the letter concludes. “Given Prime’s troubled past and regulatory problems, and its incompatibility with the historic safety net mission of Daughters, we urge you to protect the rights of patients and healthcare workers by rejecting this proposed sale.”
