SACRAMENTO (AP) — Attorney General Kamala Harris approved the sale of six nonprofit Catholic hospitals to a for-profit corporation on Friday, while imposing what she called “strong conditions” on the purchase.
The decision inserts Harris, a Democrat, into a battle between two influential labor unions just as she begins campaigning and fundraising for a U.S. Senate seat that will open next year.
By law, Harris’ office must approve purchases of nonprofit hospitals by for-profit companies in California. She approved the sale of hospitals operated by Daughters of Charity Health Systems in the Los Angeles and San Francisco Bay areas to Prime Healthcare Services Inc.
Prime had agreed to keep operating them for at least five years.
But Harris’ decision requires Prime to operate five of the facilities for at least 10 years, among other conditions.
“This approval includes strong conditions to ensure continued community access to essential healthcare services,” said a news release from Harris’ office.
The six hospitals are O’Connor Hospital in San Jose, Saint Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City, Seton Coastside in Moss Beach, St. Francis Medical Center in Lynwood and St. Vincent’s Medical Center in Los Angeles.
Harris’ decision requires Prime to operate St. Francis, O’Connor, Saint Louise and Seton Medical Center as acute care hospitals and offer emergency services there for 10 years. It requires Prime to run Seton Coastside as a skilled nursing facility with emergency services.
St. Vincent has a five-year requirement.
Some of the requirements track the agreement between the two health care systems. Prime already agreed to assume about $350 million in pension debt, retire about $400 million in other debts and liabilities, spend $150 million on upgrades and keep as many of the 7,600 jobs as possible.
Harris’ conditions “are extensive, and many are unprecedented,” Prime Healthcare said in a statement. The two health care systems “will need to evaluate the viability and future stability of the DCHS hospitals under these conditions.”
Nonetheless, Prime said it “is committed to saving the six safety-net hospitals of the Daughters of Charity Health System — just as it has done with over 30 financially distressed hospitals across the country — and preserving their mission of care now and into the future.”
Daughters of Charity said it was pleased with Harris’ decision, citing Prime’s “tremendous experience in reviving struggling hospitals.”
The hospitals have been known for serving the poor for more than 160 years. But the Los Altos Hills-based health care system that has operated the hospitals since 2002 is now struggling financially.
Ontario-based Prime Healthcare has long faced criticism over its billing practices and patient privacy, a history trumpeted by a health care union that opposed the sale. Harris’ conditions include revising its debt collection practices.
United Healthcare Workers West President Dave Regan said in a statement that Harris’ conditions would protect community health care and services. But Regan questioned if Prime would live up to Harris’ requirements.
Members of the politically powerful California Nurses Association supported the sale. Association executive director RoseAnn DeMoro urged Prime to comply with Harris’ conditions, which she said should apply to all the state’s hospitals.
Both unions have tens of thousands of members in California and have given to Harris’ campaigns in the past.
Harris announced last month that she would run for the seat held by U.S. Sen. Barbara Boxer when Boxer retires next year. Harris remains the only confirmed candidate so far. Others, including former Los Angeles Mayor Antonio Villaraigosa, are weighing bids.
The California Nurses Association gave Harris $13,900 for her 2010 campaign for attorney general and $7,500 for her re-election campaign last year. United Healthcare Workers gave the maximum contribution for Harris’ 2014 re-election campaign, $27,200.
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