Dive Brief:
- The Daughters of Charity Health System is caught in the political fight for its life—or is it? In the midst of lobbying the attorney general's office to approve its $843-million acquisition by Prime Healthcare, it ran a series of expensive and apparently misleading ads to sway public and political favor, according to the San Jose Mercury News.
- The ads depicted an empty hospital, closed to the public, suggesting that would be the provider's fate—and that people would die—if the attorney general didn't ratify the purchase agreement. Critics, however, argued that the hospital would have multiple options to pursue, like other suitors and bankruptcy protection, prior to being forced to close. Even the hospital's CEO admitted there is a "Plan B" if the state fails to approve the sale, the report stated.
- To make matters worse, the AG's approval, which is required by law because a for-profit entity is purchasing a not-for-profit one, is not a lock. California AG Kamala Harris, who is positioning herself to run for the US Senate seat being vacated by retiring longtime Sen. Barbara Boxer in January 2017, faces the inevitability of alienating one of the two major labor unions who are on different sides of the issue.
Dive Insight:
Daughters of Charity's marketing team wisely recognized that the issue before them was a political hot potato because of Harris' Senate ambitions, so they crafted a political ad campaign to get voters (er, patients) on their side. However, they unwisely followed the political practice of using hyperbole—"people will die"—to get their point across.
The "people will die" lie notwithstanding, Daughters of Charity is in real trouble, and the acquisition by Prime would help erase the system's debt and protect the majority of jobs across the system's hospital holdings, with the deal earning the support of the California Nurses Association. However, the Service Employees International Union opposes the deal because of Prime's reputation for buying hospitals and stripping them down. Given Prime's history, both sides may have a point.
All that being said, filling Barbara Boxer's seat is a high priority for California Democrats, as both key Senate posts in California have been held for the better part of two decades by Boxer and colleague Dianne Feinstein. Whoever wins the seat will likely hold onto it for just as long, as the likelihood of a Republican winning in Boxer's district is so low that the Republicans haven't even named potential candidates in the race. The choice before Harris is almost untenable, as any candidate in that district would need labor backing to get elected.
Bottom line, Harris cannot lame duck this call. It's in her best interests to put patients first and politics second. If she could find a way to approve the sale, while attaching conditions to Prime that would reduce the company's ability to roll back salaries and unreimbursed services, she might be able to thread that needle.