Dive Brief:
- Prime Healthcare has been chosen out of 133 bidders as the buyer for Daughters of Charity Health System’s six California-based hospitals. Prime’s name had preciously been floated this summer as a potential buyer the troubled Catholic nonprofit. The state’s attorney general and the Vatican will still need to approve the deal.
- Prime Healthcare Foundation, the organization’s nonprofit arm, will be an owner in the new deal. Under the terms of the agreement, Prime has promised to: spend $150 million in capital improvements in the next few years, retain the current location of the hospitals, and preserve the hospitals; charity care policies and union contracts.
- Earlier this year, Daughters saw its credit rating downgraded to a B- after a loss of nearly $75 million in 2013, which followed a separate $59.5 million loss in 2012. The deal is not assured, however. In 2011, the CA attorney general blocked a different deal between Prime and Victor Valley Community Hospital.
Dive Insight:
Opponents have already begun resisting the sale, and the noise is coming primarily from the Service Employees International Union-Healthcare Workers West. The SEIU and Prime have an antagonistic relationship and the organization has said publicly it plans to use a media campaign urging the state Attorney General, Kamala Harris, to block the sale. The SEIU has touted ongoing investigations into Prime’s Medicare billing and has said the hospital system seeks profit over caring for the community and its workforce. Prime has denied the charges, saying the SEIU is attempting a smear campaign, and filed a lawsuit against the organization in August.
This ongoing feud intensified earlier this summer when Prime and a handful of other major hospitals, including Providence Health & Services and Cedars-Sinai, did not sign onto a recent labor agreement between the SEIU and the California Hospital Association. Shortly after the systems rejected the agreement, the SEIU sent letters to elected officials in the state calling on them to sever ties with Prime and its CEO Prem Reddy.