“It’s beyond comprehension how the Mercury News could advocate for the potential closure of six vital community hospitals in California and the loss of pension and health benefits of 16,000 union and non-union workers. But that is essentially what it called for in its ill-considered editorial urging the state Attorney General to reject the sale of Daughters of Charity Health System (DCHS) to Prime Healthcare.
The Daughters of Charity hospitals — including O’Connor Hospital in San Jose and Saint Louise Regional Hospital in Gilroy — are losing $10 million a month and are in very real danger of shutting down or filing for bankruptcy. With cash reserves running low, time is of the essence. Rejection of the sale by Attorney General Kamala Harris would accelerate the financial crisis and eventual demise of these facilities.
This is not an empty threat. In January 2014, the DCHS board of directors responded to this severe financial distress and launched an exhaustive search for a buyer with the experience and financial wherewithal to nurse the hospitals back to health.
More than 130 health systems expressed initial interest, and from there the choices were whittled to four finalists. In the end, Prime Healthcare was far and away from the best candidate, meeting or exceeding all the criteria established by the board. Prime Healthcare will keep the hospitals open, continue the charity care mission, honor all union contracts and invest $150 million in capital improvements over the next three years.”
Equally important, Prime Healthcare has agreed to take 100 percent responsibility for all pension obligations for past and current employees, throwing a life jacket to thousands of health care workers in danger of losing their retirement benefits. Selling the hospital piecemeal — as the Mercury News also supports — would have decimated the pension benefits of so many dedicated workers.
Instead of embracing the sale as a win-win for the hospital community and its workers, the Mercury News preferred to portray Prime Healthcare as a wolf in sheep’s clothing bent on maximizing profits over care. Rather than examine the sale on its merits, the newspaper bought into the hype of the SEIU-UHW, a union waging a corporate campaign against Prime and more concerned about expanding its membership than improving health care. The newspaper went so far as to advocate a sale to a union-affiliated private equity firm, Blue Wolf Capital Partners, a financial organization with zero experience operating hospitals that proposed a management contract instead of an outright purchase.
Prime, on the other hand, has a history of rescuing financially distressed hospitals and turning them around while maintaining high-quality care. Founded by a successful Southern California cardiologist, Prime Healthcare has been recognized as having the Top 100 Hospitals in the nation 27 times by Truven Health Analytics. Prime has a number of hospitals recognized by federal regulators for serving a significantly disproportionate share of indigent patients and provided more than $2 billion in charity and uncompensated care from the fiscal year 2010 through the fiscal year 2013, nearly twice the state average.
The Mercury News holds out a federal investigation of Prime’s billing procedures as proof of its unworthiness. But it’s not unusual for the federal government to look into the billing procedures of major hospital chains given the complicated nature of today’s health care industry. In fact, few hospitals or health systems escape this sort of government scrutiny.
Prior to the attorney general decision, a series of hearings will be held for public feedback. It’s expected that approval would be contingent on Prime meeting its stated obligations and that additional conditions may also be applied under the attorney general’s broad discretion.
Daughters of Charity Health System welcomes the review and remains confident that the attorney general will see the extraordinary benefits of the Prime Healthcare offer and approve the sale as being in the best interest of our communities and hospital employees.
Robert Issai is president and CEO of Daughters of Charity Health System. He wrote this article for this newspaper.
To go to the entire San Jose Mercury News article, click this link