DCHS announces sale of St. Vincent, St. Francis hospitals

The Daughters of Charity Health System’s board of directors last week approved the sale of its medical foundation and six California hospitals — including St. Vincent Medical Center, the first hospital established in Los Angeles — to Prime Healthcare Services and Prime Healthcare Foundation (Prime Healthcare) based in Ontario.

The decision was announced Oct. 10 by Robert Issai, DCHS president and CEO, and Prem Reddy, MD, chairman, president and CEO of Prime Healthcare Services, one of the largest hospital systems in the nation operating 29 acute-care hospitals in nine states.

In its Oct. 10 press release, DCHS said that Prime Healthcare’s purchase of the DCHS hospitals and medical foundation will ensure a continuity of care while preserving the pension plans of former and current DCHS workers. Approval of the sale by the Vatican is pending, and the sale must also be reviewed and approved by the California Attorney General.

“Our priority was to seek the best buyer who could guide our hospitals into a successful future while honoring the obligations to our associates, retirees and other constituents,” said Issai. “Prime Healthcare’s bid was superior to all others, and we are excited by today’s announcement. Prime’s selection ensures that our communities will have access to high-quality health care for years to come, that pension plans for our employees will be funded and investments will be made in our facilities.”

“The Daughters of Charity consider it an honor to have served the health care needs of the sick and those who are poor in California for 162 years,” said Daughters of Charity Sister Marjory Ann Baez, DCHS board chair. “Prime Healthcare gives us hope for the future of healthcare in the communities we serve. After careful consideration and discernment, we are confident in our decision and our leaders look forward to working with Prime Healthcare to ensure our hospitals remain viable now and in the future.”

“We are truly honored to be chosen by the DCHS board of directors to extend their mission of care delivered for decades by the doctors, nurses and staff so dedicated to the well-being of their patients,” said Dr. Reddy.

Being sold are St. Vincent Medical Center (originally established in 1858 as the Los Angeles Infirmary), St. Francis Medical Center in Lynwood, O’Connor Hospital in San Jose, Saint Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City, and Seton Coastside in Moss Beach, as well as the statewide DCHS Medical Foundation.

Last year, DCHS hospitals saw 172,000 emergency room visits and provided in excess of $159 million in uncompensated care and services to people living in poverty, in addition to $22 million in traditional charity care. At the same time, operating losses continued to mount at a pace of $10 million a month due to increasing labor costs, low medical reimbursement rates and an evolving health-care marketplace, according to DCHS officials.

The DCHS board began soliciting buyers in February, and the original list of 133 potential buyers contacted by DCHS was narrowed to four finalists. According to DCHS’ press release, no combination of offers for individual hospitals and other assets equaled the strength of full-system offers.

“Prime Healthcare’s bid was superior in all categories, meeting or exceeding more of the criteria set by the DCHS board of directors than any other bidder,” DCHS said in its written statement.

As listed in the statement, Prime Heathcare “is committed to maintaining each of the DCHS hospitals in the communities they serve; is committed to spending at least $150 million in capital improvements at the DCHS hospitals over the next three years; is committed to maintaining DCHS charity care policies and funding a pastoral care program; [and] will assume existing union contracts.”

In an Oct. 10 press release, SEIU-United Healthcare Workers West said it will begin airing TV ads in Sacramento and San Francisco urging California Attorney General Kamala Harris to reject the sale to Prime Healthcare on behalf of thousands of DCHS workers objecting to “Prime’s poor patient care record.”

“Prime has admitted that it is under civil and criminal investigation for allegedly overbilling Medicare, and has threatened to take the Daughters hospitals into bankruptcy,” said the union’s statement.

“It’s disappointing and hard to understand how Daughters of Charity’s current owners could turn their back on 100 years of serving the poor by selling to a company with Prime’s history,” said Dave Regan, president of SEIU-United Healthcare Workers West.