Consumer Watchdog Calls on Attorney General to Approve Daughters of Charity Sale to Prime Healthcare

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SANTA MONICA, CA: In order to keep a critical local hospital open in an underserved community, Consumer Watchdog joined neighborhood activists and the California Nurses Association in supporting a bid by Prime Healthcare to purchase Daughters of Charity Health System. Consumer Watchdog spoke at a public hearing organized by the Attorney General’s office, at St. Francis Medical Center in Lynwood, California.

“Given St. Francis’ critical role in providing quality healthcare for this service area, without this sale, this community will be at risk of losing key services that are essential for the low-income, uninsured, and under-insured patient population,” said Michael Kapp, a consumer advocate with Consumer Watchdog. “Prime Healthcare’s bid should be approved to ensure that this community doesn’t lose a desperately needed healthcare facility.”

Read the written testimony here:

Daughters of Charity Health Systems (DCHS) owns and operates six hospitals throughout California, but is losing $10 million a month and is on the verge of bankruptcy. After six months of an intense bidding process, DCHS approved the sale to Prime Healthcare, which promised to keep all six hospitals open, retain all staff, spend $150 million in capital improvements, absorb all debt, and protect pensions of current and former employees. This bid was approved by the California Nurses Association, SEIU Local 121RN, and the California Hospitals Association. DCHS President and CEO Robert Issai said that Prime Healthcare was “far and away the best candidate.” The sale requires the approval of the Attorney General.

However, SEIU-UHW and its president, Dave Regan, have fought Prime’s bid, putting the sale in jeopardy and moving the hospitals closer to bankruptcy and closure.

In May 2014, Consumer Watchdog and news reporters received an anonymous delivery of a recording of a conference call where the leader of SEIU-UHW, Dave Regan, announced to his leadership a new deal between the union and the California Health Care Association that allegedly stopped the union from proceeding with two heath care ballot initiatives that would have limited hospital prices and CEO pay. Prime Healthcare didn’t sign that agreement and Regan articulated to his leadership how SEIU-UHW was “going to be public and beat them up” and to “get these guys to heel.”

The pact is a continuation of “non-aggression” pacts the Regan-led unions have cut with Kaiser, nursing homes and other hospitals over the years — whereby the unions involved agree not to publicly blow the whistle on quality-of-care problems and to work politically with Kaiser and it others partners.

In the May 2014 deal, the union and trade association hospital signatories agreed not to oppose one another politically in exchange for what appears to be a leg-up in unionization for SEIU-UHW and a $100 million political action committee mainly paid by the hospitals. Prime’s failure to ante up to this fund and sign the deal has, by Regan’s own admission in the recording, made it the target of the SEIU-UHW campaign. The recording has already been provided to the Attorney General’s office.

Listen to the leaked recording here:

Key quotes from the tape are summarized here:

Consumer Watchdog noted that the majority of St. Francis’ service area are designated “Health Professional Shortage Areas”:

“The hospital’s service area has an average household income nearly 34% lower than LA County. More than 32% of adults within St. Francis’ service area are uninsured. More than 21% of adults in the service area reported having no regular source of care. St. Francis’ service area reported higher percentages of adult obesity and diabetes than the LA County average. More than 14% of children in the hospital’s service area reported difficulty accessing medical care, higher than LA County. This is a community that is in desperate need of medical care.”

Consumer Watchdog warned that failure to accept Prime Healthcare’s bid would force DCHS hospitals, including St. Francis, into bankruptcy and closure: “by rejecting this bid because of this highly-charged political debate, an underserved community and its hospital will be caught in the crosshairs. There’s no reason not to approve this sale to Prime Healthcare.”

The Attorney General must reject, approve, or impose conditions on the deal by February 6th.

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