Citing a questionable bidding process, the California attorney general nixed the proposed $55 million sale of not-for-profit 224-bed Anaheim Memorial Medical Center to for-profit Prime Healthcare Services, owned by controversial physician Prem Reddy. In a July 11 letter, Chief Deputy Attorney General James Humes said information received since the proposed sale was announced on Feb. 28 revealed that some potential alternative bidders indicated a tentative willingness to pay substantially more for Anaheim than was offered by Prime.
The reasons why the bids failed to be fully developed, withdrawn or rejected by Anaheim are uncertain or disputed, he said, and evidence suggests that potential bidders may have been treated differently and did not have equal access to relevant information. Humes said he would take no position as to whether we would consent to a sale under similar terms if it were to emerge from a bidding process that we could determine was open, fair, and transparent.
Prime Healthcare Services said in a statement that it "respects the decision" based on the attorney general's "inability to conclude that the bidding process was fair to all bidders." Company officials added that they are prepared to participate in any new process that Anaheim's owner establishes for the sale of the hospital.
This was an open and transparent seven-month process, said Barry Arbuckle, president and chief executive officer of five-hospital Memorial Health Services, owner of Anaheim. Prime was chosen because it was the only bidder that was both financially sound and had experience running hospitals. Memorials concern was that this hospital would be there for years to come. Prime was selected because it was willing to invest $25 million into this hospital when no other bidder was willing to do so to ensure the continued viability of the hospital in serving the community. -- by Cinda Becker