The California attorney general today released a report that recommends approval of the proposed sale of 224-bed Anaheim (Calif.) Memorial Medical Center by six-hospital Memorial Health Services to Prime Healthcare Services, a Delaware-based for-profit company that owns eight Southern California hospitals.
The 70-page report, prepared by an outside consultant, stipulates that a blessing of the $55 million deal should come with conditions, which largely mirror what Prime promises in the acquisition agreement.
The attorney general also set a June 15 public forum to solicit comment on the sale, which has drawn opposition from the California Nurses Association, United Healthcare Workers and Latino health advocates, who claim that Prime has a track record of cutting medical services at acquired hospitals and limiting access by canceling managed-care contracts.
In the acquisition agreement, Prime agrees to keep all employees at their current wages, adhere to the existing charity-care policy, put $25 million into the facility in the first five years of ownership, operate the facility as an acute-care hospital with emergency services for at least five years and assume existing provider and payer contracts.
But Prime vice president and general counsel Michael Sarrao clarified that most of Anaheim's contracts include terms for cancellation by either party without cause, and that the language of the attorney general's report seems aimed at compelling Prime to forfeit the option.
"We're not giving up that right," Sarrao said. "They're basically saying we want you to continue to lose money, but at the same time we want you to improve the hospital."
The attorney general's report echoes the opponents' concerns in its conclusions, stating, "as a result of the business practices and medical policies of both Prime and area health maintenance organizations, it is likely that many managed-care patients will be unable to utilize the hospital except on an emergency basis."
Memorial, meanwhile, has said it would put the $7.9 million in proceedsthe leftovers after paying transaction costs and Anaheim's obligationstoward a new patient tower at its 211-bed Miller Children's Hospital in Long Beach, Calif. -- by Gregg Blesch