California Attorney General Kamala Harris. Photo by John Schreiber.
California Attorney General Kamala Harris. Photo by John Schreiber.

State Attorney General Kamala Harris approved the sale of six Daughters of Charity Health System hospitals Friday, including two in Southern California, to Prime Healthcare Services Inc., subject to a series of conditions.

The Southern California hospitals in the sale are St. Francis Medical Center in Lynwood and St. Vincent Medical Center near downtown Los Angeles.

The proposed sale was the subject of intense debate, with opponents saying they feared Ontario-based Prime Healthcare would cut services to bolster the company’s profits. Proponents, however, said the struggling hospitals faced possible closure if the deal was not approved.

Harris included a dozen conditions on the sale, including a requirement that for-profit Prime invest $150 million for capital improvements at the hospitals over the next three years, and mandating maintenance of the hospitals and emergency services for 10 years.

Daughters of Charity issued a statement saying the hospital network is working with Prime Healthcare “to evaluate the AG’s conditions to approval.”

“As we have stated before, Prime has tremendous experience in reviving struggling hospitals and we are both committed to a transaction that positions the hospitals to continue to deliver high quality care to the communities they serve,” the statement says.

Harris faced a deadline today to decide whether to sign off on the proposed sale.

Robert Issai, chief executive of the Daughters of Charity, had warned that the network was losing more than $10 million per month and would file for bankruptcy if the sale was not approved.

The California Nurses Association/National Nurses Unite applauded the sale.

“While we haven’t reviewed the entire document, based on the provisions cited in the Attorney General’s statement, 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.

“Further, 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,” DeMoro said.

With the purchase, fast-growing Prime Healthcare becomes one of the top five hospital companies in the United States.

“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 10 years,” the San Bernardino County-based company said in a statement.

“Prime Healthcare, with DCHS, will need to evaluate the viability and future stability of the DCHS hospitals under these conditions,” the company said. “Prime Healthcare and DCHS remain committed to ensuring a future for these hospitals that will allow them to continue their legacy of service and deliver the highest quality of compassionate care to their communities.”

Harris approved the transaction with the following conditions:

— Prime must operate St. Francis, and other facilities, as acute care hospitals and offer emergency services for 10 years;

— Prime must be certified to participate in the Medi-Cal and Medicare programs and have or maintain Medi-Cal managed care contracts at each of the facilities for 10 years;

— Prime must continue to provide essential health care services at the facilities including reproductive health care services;

— Prime must invest $150 million in capital improvement expenditures at the facilities over the next three years;

— Prime must continue to provide charity care and community benefits at historic levels;

— Prime will assume and guarantee all pension obligations covering about 17,000 current and retired employees;

— at each of the facilities and the medical office buildings, there shall be no restriction or limitation on providing or making reproductive health care services available, and this requirement must be explicitly set forth in the facilities’ policies and procedures;

— Prime must meet seismic compliance requirements until 2030 at all the facilities;

— Prime must revise its policies, tools, procedures, guidelines and training materials for its debt collection practices to ensure it does not violate state and federal debt collection laws and regulations;

— at each of the facilities and the medical office buildings, there shall be no discrimination against lesbian, gay, bisexual or transgender individuals, and the requirement must be explicitly set forth in the policies and procedures; and

— all of the facilities will be required to submit to the AG an annual report describing in detail their compliance with the conditions.

Harris said the decision to approve the transaction follows an in-depth review that included five independent Health Care Impact Statements; six public meetings that collectively went more than 44 hours and where hundreds of comments were submitted; receipt and consideration of more than 14,000 comments separately delivered to the AG’s office; and consultations with independent health care experts and concerned community members.

City News Service

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