Tenet Healthcare Corp.'s successful acquisition of a Los Angeles hospital is a case study of just how much flexibility is needed for a for-profit company to win government approval to purchase a not-for-profit in today's climate.
A slew of last-minute revisions to Tenet's proposal led California Attorney General Dan Lungren to approve the $100 million purchase of 409-bed Queen of Angels-Hollywood Presbyterian Medical Center (May 18, p. 4).
The OK came May 15, just 16 days after Lungren's office received the revised plan and 11 days after it was made public. The sale closed on June 12.
The relatively swift closure has drawn criticism from some consumer rights and community activists who claim there was not enough time to review the changes.
Queen of Angels and Tenet officials say the process was part of the normal give-and-take with the attorney general's office on such deals. Under a law enacted last year, Lungren has the right to veto any acquisition of a not-for-profit hospital by a for-profit operator if he believes community needs are not being met.
"The process worked the way it was supposed to," said Tenet spokesman Harry Anderson.
James Schwartz, the deputy attorney general who reviewed the deal, said the last-minute revisions-which included 14 changes that addressed issues related to levels of charitable care, emergency room services and governance-were instrumental to its closure.
Queen of Angels in April requested a 17-day extension of Lungren's review to submit the changes. The request was made after the deal was criticized in two public hearings and the Los Angeles Times questioned the structure of the resulting foundation. The hospital also is engaged in continuing legal battles with the Archdiocese of Los Angeles, which wants final approval of the transaction, and staff physicians who oppose the handover.
Tenet and hospital officials declined to offer details about the negotiations.
In its new form, the deal called for QueensCare, the foundation formed by the purchase, to provide $276.5 million specifically earmarked for services such as indigent and AIDS care, bilingual interpreters in the hospital's service area, and education and outreach programs (See chart).
San Francisco-based Consumers Union criticized the modifications, saying they fall short of the current level of service the hospital provides. Several Los Angeles-area politicians, all Democrats, demanded an extension to review the deal.
Lungren, who is the Republican gubernatorial candidate in November's election, shrugged off the criticisms in a statement. "We are not willing to sacrifice the clear benefits the community will receive from the transaction in order to meet the demands of those who may simply have ideological opposition to transactions of this type," he said.