Prime Healthcare Services Backs off Deal
Plans for the Ontario, California based Prime Healthcare Services to buy the Daughters of Charity Heath System have collapsed. This has moved the financially struggling health system to a situation where filing for bankruptcy is potentially their best move.
“Every option is now on the table, including bankruptcy,” said Robert Issai, Chief Executive of the Daughters of Charity chain.
The deal called for Prime Healthcare to buy the small network of six hospitals for $843 million, with the basic stipulation of running it similarly to the way it’s been operated until now. Prime is blaming the California State Attorney General’s office for adding too many caveats to the deal, which practically made the purchase impossible.
“Unfortunately, the conditions placed on the sale by the California Attorney General are so burdensome and restrictive that it would be impossible for Prime Healthcare — or any buyer — to make the changes needed to operate and save these hospitals,” said Prem Reddy, Founder of Prime Healthcare Services.
Daughters of Charity Helps Low Income Patients
The Daughters of Charity Heath System is a group of hospitals with Roman Catholic affiliation, and one of its goals is to serve the medical needs of low income families in and around the communities in which the hospitals are found. Part of the deal with Prime was to ensure that the hospitals would continue to provide treatment to these families without creating a financial burden on them.
The hospitals included in the Daughters of Charity System in California are: O’Connor Hospital in San Jose, Saint Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City, Seton Coastside in Moss Beach, near Half Moon Bay, St. Vincent Medical Center and St. Francis Medical Center. The last two on the list are located in L.A. County.
Other details of the deal were to guarantee the hospitals staying open for minimum of 10 years following the sale, and maintaining the pension payments of all of the 17,000 former employees of the hospital network.
Prime is at the Top of the Field in Hospital Takeovers
Prime Healthcare Services is a large network of hospitals that specialize in buying out and taking over financially struggling hospitals and turn them into profit generating institutions. They own and operate 34 hospitals across the country.
Some of the tactics that Prime Healthcare Services employ to turn around a poor financial situation in a hospital they buy is through cost cutting and intense negotiations with insurance companies.
Disastrous to Close These Hospitals
The concern for the welfare of these six hospitals is not only with the many low income families that use the hospitals, but also the over 7,600 employees that work for Daughters of Charity Health Systems.
For these two reasons, Prime has received some harsh criticism.
“Prime is choosing to walk away from this transaction after publicly stating that it had no issue with the 10-year conditions and intended not to close any of the hospitals or end essential services,” said Attorney General Kamala Harris. “By walking away, Prime is confirming many of the concerns heard at multiple community meetings that the continuity of vital healthcare services in these communities is not its priority.”
“My only concern is whether we’re going to lose our jobs,” said Maricela Mora, a phone operator at St. Vincent Medical Center, “I’m worried about what’s going to happen to us.”