By the end of this week, Memorial Health Services, Huntington Beach, Calif., should know whether it will have to start again in its two-year quest to find a partner or buyer for its 223-bed Anaheim (Calif.) Memorial Medical Center.
Pacific Health Corp., Tustin, Calif., could be the third Anaheim Memorial suitor to run aground. Two of the for-profit companys hospitals are alleged to have participated in a scheme to bill government healthcare programs for bogus illnesses.
The California attorney generals office is scheduled to make a ruling on the proposed acquisition by Aug. 15, said Abraham Arredondo, a spokesman for Attorney General Jerry Brown. Arredondo would not comment on whether Los Angeles City Attorney Rocky Delgadillos allegations affect the ruling. The attorney generals office is aware of allegations of poor patient safety made against 126-bed Anaheim General Hospital, another Pacific Health hospital, Arredondo said. Anaheim General was not named in Delgadillos lawsuit.
Memorial Health Services was aware that the city attorney was investigating the allegations in the civil lawsuit filed last week, but to date, the not-for-profit system has seen no evidence that Pacific Health is unfit to buy and operate Anaheim Memorial, said Jerry Peters, the lawyer representing Memorial Health on the transaction.
Most importantly, Pacific Health has not been and is not expected to become a target of the federal criminal investigation, said Peters, a partner for Latham & Watkins. Federal investigators have told Pacific that it is not a target of the investigation, although the company likely has documents that could provide evidence of the allegations, he said.
Memorial Health announced in July 2006 that it would seek a partner or buyer for Anaheim Memorial. The first successful bidder, Prime Healthcare Services, Victorville, Calif., said its $55 million bid rejected by the attorney generals office. The second winning bidder, Integrated Healthcare Holdings, Santa Ana, Calif., had to abandon its bid of $68 million in cash and $28.7 million in capital improvements when it couldnt secure financing for the deal. Pacific Health has agreed to pay $57.1 million for Anaheim Memorial.