The much-anticipated announcement of a merger between Catholic Healthcare West and UniHealth has been pushed back to as late as November, sources close to the not-for-profit companies said last week. The announcement had been expected by late September.
Negotiations between the two systems have been going on since last December (Dec. 8, 1997, p. 3).
A deal would spell financial relief for Burbank, Calif.-based UniHealth, whose eight Los Angeles-area hospitals are more than $300 million in debt. And it would make a Los Angeles powerhouse of CHW, which operates 38 California hospitals from its base in San Francisco but does not dominate a particular region.
Sources say a number of reasons could be contributing to the two-month delay.
The denial of local anesthesia to low-income expectant mothers at the Roscoe Boulevard campus of UniHealth's Northridge Hospital Medical Center could hold up the deal and affect the terms. The Los Angeles Times reported in June on the incidents after patients notified the paper, and the hospital confirmed the denials took place. The state's Department of Health Services has ordered that the mothers be compensated. DHS, HCFA and the Los Angeles district attorney are investigating the incidents.
Without revealing details of its investigation, the California attorney general's office confirmed that it's examining the CHW-UniHealth deal. Sources said the probe may center on the structure of UniHealth's current and future charitable foundations.
Under state law, the attorney general has the right to scrutinize and even delay hospital deals involving the assets of a not-for-profit organization being transferred to a for-profit organization. It usually takes a less activist role in deals between two not-for-profits.
Susan Whitten, a spokeswoman for CHW, said the attorney general's examination of UniHealth's foundations would be part of the normal process involving an affiliation with another party. UniHealth officials declined comment.