- Daughters of Charity Health System revealed on Tuesday that Prime Healthcare Services has decided to reject its $843-million proposed deal to purchase the struggling system.
- "Prime contends that the conditions placed on the sale by the attorney general justify their decision not to move forward and will have negative repercussions for its future transactions elsewhere in the United States," said Robert Issai, president and CEO of Daughters of Charity.
- Daughters of Charity will almost certainly file for Chapter 11 bankruptcy reorganization in light of the failure of the deal, according to The San Jose Mercury News.
California Attorney General Kamala Harris approved a conditioned deal under which Prime Healthcare would acquire the six Daughters of Charity hospitals late last month. The deal, which is the largest ever overseen by Harris' office, laid out a number of conditions: According to an office release, Prime must provide charity care "at historical level" and reproductive care without "restriction or limitation," as well as invest $150 million on capital improvements and assume pension obligations for Daughters of Charity's 17,000 active and retired employees. Prime must also maintain its Medi-Cal and Medicare certifications for a decade.
At the time, Prime called the imposed conditions "extensive" and "unprecedented."
Following the deal approval, Daughters of Charity filed a lawsuit against SEIU-United Health Workers West—who have vehemently opposed the acquisition from the beginning on the grounds that Prime puts profits over patients—alleging that the union used "extortionist threats" to try to block the sale of its hospitals to Prime. The union's concerns ultimately won out in Harris' conditions, however, and Prime has apparently decided that enough is enough.
Prime's reversal rings familiar in light of Tenet's recent decision to back out of its proposed acquisitions of four Connecticut hospitals due to regulatory concerns: The state Office of Health Care Access set 47 conditions affecting operations and the office of the attorney general set 21 conditions impacting finances.
"The extensive list of proposed conditions... has led us to conclude that the approach to regulatory oversight in Connecticut would not enable Tenet to operate the hospitals successfully for the benefit of all stakeholders," Tenet said in a statement when it withdrew its purchase application in December.