Prime Healthcare has decided not to buy six California health care facilities, a highly controversial transaction that was approved under unprecedented conditions by Attorney General Kamala Harris last month.
Officials for the financially strained Daughters of Charity Health System chain say failure to complete this sale will force them to file for Chapter 11 bankruptcy.
“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 important,” Harris said in a statement.
The California Nurses Association noted that the turbulent transaction may not be over.
“We believe there are still actions going on behind the scenes, and it is our view that the hospitals must remain open,” CNA spokesman Chuck Idelson said.
The Daughters operate a network of facilities in low-income communities, including the four located in the Bay Area and two down in Los Angeles County that were up for purchase by Prime.
In her conditions for the sale, Harris required Prime to operate the Daughters’ five acute care hospitals and its one skilled nursing facility located at Seton Coastside for a minimum speeddating oslo of 10 years.
Prime officials also would have been required to maintain current services at the six facilities, in addition to investing $150 million over the next three years on capital improvements and assuming all pension obligations for the 17,000 current and retired Daughters employees.
“Unfortunately, Prime contends that the conditions placed on the sale by the attorney general justify their decision not to move forward and will have negative repercussions for its future transactions elsewhere in the United States,” Robert Issai, president and CEO of Daughters, wrote in an email to his employees.
“We strongly disagree with Prime’s position on the Attorney General conditions. We are confident that Prime could successfully turn around the DCHS hospitals,” Daughters spokesperson Elizabeth Nikels said. “We remain committed to finding the best solution for our patients, communities we serve, physicians, employees, retirees and creditors.”
The contentious 14-month-long transaction pitted two of the state’s powerful interest groups against one another – including the California Nurses Association that supported the deal and the SEIU–United Healthcare Workers West that opposed it.
A federal investigation into Prime is currently underway for its alleged improper inpatient billing practices, and a history of service reductions.
“It is my belief there is still a viable buyer that will carry out DCHS’s mission of serving the poor and working on behalf of the community,” said Assemblymember Anthony Rendon, D-Lynwood, whose district contains one of the for-sale hospitals.