Daunted by inadequate reimbursements, impending state-mandated seismic renovations, and out-of-control losses, Adventist Health announced a deal last fall to sell 102-year-old Paradise Valley Hospital in National City, Calif.
The proposed $30 million sale of the 301-bed not-for-profit safety net hospital to for-profit Prime Healthcare Services, a privately held company owned by an unconventional cardiologist, pulled the rug out from under the impoverished community, which lies 10 miles north of the Mexico border. It unleashed a maelstrom of protests from a bevy of factions, demonized the faith-based Adventist, provoked the usual final hour community counteroffer, and culminated in a nine-hour public hearing in January.
Yet despite the overwrought public process, on March 1, with only a few details of the original deal changed, Prem Reddy, chairman of the board of Victorville, Calif.-based Prime, took title to the hospital after agreeing to a list of 15 conditions. Although the stipulations might sound breathtaking in scope and appear to signal yet another intrusion by state regulators on the embattled hospital industry, none is particularly onerous and in fact most, such as a provision for charity care, serve essential community needs, Reddy said.
If anything, the community meltdown over the conversion of Paradise Valley may be merely another symptom of a fragile not-for-profit hospital system in imminent danger of collapse. Andif the response in National City is any indicationas helpless and frustrated as local groups are in controlling
the destinies of community hospitals addicted to state and federal funding, those watchdogs will not be stopped from demanding that a bright light be shined on the merger and acquisition process, even at the most sensitive times
Everybody is interested in the best thing for their community and yet because of the difficult economics of healthcare, there are no solutions agreeable to all parties, said Phil Dalton, president of consulting firm Medical Development Specialists, which prepared an impact report on Primes proposed acquisition for the state attorney generals office. It creates the idea that there are villains when everybody is just trying to work toward the best healthcare solution.
The public implosion in National City also upset the traditional lines of demarcation between healthcare providers, this time pitting doctor against doctors, signaling that in the future loyalties may be upended in a free-for-all competition for stakes in the nations distressed healthcare system.
When the deal closed last week with Prime in possession of Paradise Valley and the various interest groups licking their wounds, Prime announced plans to acquire its ninth hospital: the not-for-profit 224-bed Anaheim (Calif.) Memorial Medical Center for approximately $50 million. Meanwhile, as the community steeled itself for another possible round of protests over the conversion of a not-for-profit hospital, Democratic state Sen. Denise Moreno Ducheny introduced legislation that would amend the states not-for-profit public benefit corporation law to require a minimum 60-day public offering and exposure in the open market before any not-for-profit hospital could be sold.
In a news release, Ducheny reserved her deepest disappointment for Roseville, Calif.-based Adventist, which has shown little concern or respect for our community and their own employees throughout the process, she said. The bill aimed to close the loopholes exposed by the system when it manipulated this process in a way not seen before, she said.