With Prime Healthcare backing out of a $837 million deal to buy six Daughters of Charity hospitals, including Seton medical centers in Daly City and Moss Beach, the nonprofit health provider is being urged to find a new buyer — and quick.
Without a suitable buyer, the fear is that the Daughters of Charity will fall into bankruptcy and that residents in north San Mateo County and on the coast will be forced to travel great distances for doctor visits or in emergencies.
Prime pulled out because of “onerous and unprecedented conditions” forced on the acquisition by state Attorney General Kamala Harris.
“The sheer number of conditions — more than 300 — is unheard of in California, or anywhere else in the United States,” Troy Schell, general counsel for Prime Healthcare wrote in a statement.
Prime agreed to run the system as-is for five years but Harris mandated it be for 10 years when she recently approved the sale.
“Maintaining all services for 10 years regardless of whether the services are needed or ‘essential’ for the communities served is unprecedented and untenable. In essence, the attorney general is telling Prime Healthcare to operate the hospitals exactly as DCHS has and expect different results,” Schell wrote in the statement.
Prime contends Harris bowed to political pressure and imposed the “most extensive and overreaching conditions in history.”
But Harris shot back at Prime in her own statement Tuesday.
“I imposed conditions to ensure the continuity of these health care services, including the most essential health care services remain in place for 10 years ... 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,” Harris wrote in the statement.
Prime’s decision, Harris wrote, shows that it did not make continuing the services the hospitals provided a priority.
The purchase of the hospitals by Prime was endorsed by the California Nurses Association but the union that represents other hospital workers, the Service Employees International Union/United Healthcare Workers West, opposed it.
SEIU/UHW praised the conditions Harris forced on the deal and urged the Daughters of Charity Tuesday to consider selling off each of the six hospitals individually.
Santa Clara County has agreed to purchase O’Connor Hospital in San Jose and Saint Louise in Gilroy and a nonprofit has its eyes on purchasing two of the hospitals in the Los Angeles area, according to the SEIU.
The SEIU claims “a respected health care company” is lined up to buy Seton Hospital in Daly City and Seton Coastside Medical Center in Moss Beach but declined to divulge who they say the buyer is.
It is unlikely another company would accept the same terms and conditions that Harris placed on the Prime deal, said San Mateo County Supervisor Don Horsley, who represents coastside residents.
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The county has also been subsidizing Seton’s services in the area with $1.2 million monthly payments, Horsley said.
Losing skilled-nursing beds and emergency services will hurt Medi-Cal patients the most, he said.
The Daughters of Charity expressed disappointment with Prime’s decision.
“We strongly disagree with Prime’s position on the attorney general conditions. We are confident that Prime could successfully turn around the DCHS hospitals,” Elizabeth Nikels, spokeswoman for the Daughters of Charity wrote the Daily Journal in an email. “Over the coming days, we have difficult decisions to make and we will communicate those decisions after we have a chance to consult with our advisers, boards of directors and the Daughters of Charity.”
Seton is Daly City’s largest employer with 1,200 workers.
Daly City Councilman David Canepa said north San Mateo County cannot operate without a hospital.
“It’s a sad day ... what I’m hoping they don’t do is file for bankruptcy. That is not the right approach. Daughters of Charity has a commitment to our community to remain open and operational,” Canepa said.
Daughters of Charity is losing about $10 million a month, Prime argued, which makes keeping the service as is unsustainable.
If it continued to run the system as is, it would lose $3 billion over the course of the 10 years, according to Prime.
Horsley said he understood Prime’s decision.
“Ten years is a long time to not be able to make adjustments,” Horsley said.
Prime promised to keep the hospitals open for five years, fund the pensions of 17,000 current and former employees and invest $150 million in capital improvements as well as maintaining or increasing charity care.
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