The Archdiocese of Los Angeles will be allowed to pursue its objections to the proposed sale of Queen of Angels-Hollywood Presbyterian Medical Center, a not-for-profit Roman Catholic hospital, to for-profit Tenet Healthcare Corp.
However, if Tenet's recent success at defusing canonical objections in St. Louis is any indication (See story, p. 35), the archdiocese's involvement is unlikely to block the Los Angeles deal.
In a Feb. 23 letter to the hospital's attorneys, California Attorney General Dan Lungren declared that according to his reading of canon law, the archdiocese and Cardinal Roger Mahony have operational jurisdiction over the 409-bed hospital.
Hollywood Presbyterian and archdiocese-controlled Queen of Angels merged in 1991, but the medical center operates on property that had been owned by Hollywood Presbyterian. The medical center now is owned and operated by a not-for-profit organization and St. Joseph's Health Support Alliances, a corporate affiliate.
In December Santa Barbara, Calif.-based Tenet signed a letter of intent to acquire the hospital for $86.4 million in cash and other interests after nearly a year of negotiations (Dec. 22-29, 1997, p. 4). The state attorney general's office and Los Angeles County officials have been reviewing the potential sale. Meanwhile, a suit by Queen of Angels' medical staff to block the deal is pending.
Mahony has strongly objected to the sale of the hospital to a for-profit organization. On Feb. 17 he sent a cease-and-desist letter to the hospital and threatened to take the issue to the Vatican by the end of this month.
Lungren, in his letter, stated, "Our reading of the merger agreement and (the hospital's) bylaws suggests that the cardinal's determination is binding."
In St. Louis, Tenet closed its $300 million purchase last week of Saint Louis University Hospital, a Catholic facility, after the Vatican set aside the objections of St. Louis Archbishop Justin Regali. Tenet agreed to maintain Catholic standards of care and other conditions to close the deal.
Tenet is unfazed by the latest development in Los Angeles. Spokesman Harry Anderson declared that "our interest in pursuing the transaction is undiminished."
Sources close to the transaction contend Mahony's case is weaker than the one involving the St. Louis sale because the Catholic Church does not own the property. As in the St. Louis case, Tenet has pledged to maintain Queen of Angels' previous standards of care and to continue treating the poor.
The attorney general's office is reviewing the sale under the California hospital conversion law, which took effect Jan. 1. The law gives the attorney general the right to final review and approval of all transfers of not-for-profit hospitals to for-profit organizations. The law also requires a public hearing, which was set for Feb. 28.
Meanwhile, Los Angeles County officials are examining such issues as whether the sale of Queen of Angels, which provides about $15 million annually in charity care, will be detrimental to community health services (Feb. 23, p. 16).
"We're continuing to proceed on our own, but this is an issue that will have to be resolved in one way or another," said Deputy Attorney General Jim Schwartz, who is overseeing the transaction. The attorney general is expected to issue a ruling on the deal by mid-April.
Hospital officials declined comment on the archdiocese's involvement, other than saying they are studying the matter.