To not-for-profit Memorial Health Services, Anaheim (Calif.) Memorial Medical Center must seem an awful lot like two-sided tape. The Fountain Valley, Calif., system just cant get the 223-bed hospital off its hands.
The California attorney generals office has rejected Memorials proposed sale of Anaheim Memorial to Pacific Health Corp., Tustin, Calif., for $57 million. The attorney general now has rejected two proposed sales of the hospital to for-profit companies, while a third sale to a for-profit foundered because the buyer could not secure financing.
In a letter, Chief Deputy Attorney General James Humes wrote that the civil action filed against Pacific and some of its former executives earlier this month (Aug. 11, p. 6) played a role in the decision. The Los Angeles city attorney filed a lawsuit accusing three hospitalsincluding two owned by Pacificof participating in a scheme to bill government healthcare programs for bogus illnesses. Those Pacific hospitals were also among three hospitals raided by federal agents in a federal criminal fraud investigation. Pacific Health has maintained that neither the company nor its hospitals are targets of that investigation. Nevertheless, Humes also cited that investigation in his letter, along with his offices investigation, consultants reports, public comments and potential alternate bidders.
After the raid, Jerry Peters, a lawyer representing Memorial in the sale, told Modern Healthcare (Aug. 11, p. 7) that Pacific had disclosed the investigation to Memorial and appeared fit to acquire and operate the hospital. A Memorial spokeswoman said that the system was exploring its options after the attorney generals ruling.
In a statement, Pacific said that Anaheim Memorial fills a need in its community, and We hope this latest setback does not jeopardize its future. Pacific said that it expects to be cleared of all the allegations.
In July 2007, the attorney generals office rejected a proposed sale to Prime Healthcare Services, Victorville, Calif. Another proposed sale of the hospital was scuttled when the buyer, for-profit Integrated Healthcare Holdings, Santa Ana, Calif., could not complete financing of the deal.