California regulators should condition the sale of six not-for-profit Catholic hospitals on a commitment to keep the facilities open for 10 years, a state-commissioned consultant recommended.
Prime Healthcare Services has pledged to keep the financially struggling Daughter of Charity Health Systems hospitals open at least five years and maintain existing services. The Ontario, Calif.-based for-profit chain has also agreed to assume about $350 million in pension debt, retire about $400 million in other debts and liabilities, spend $150 million on upgrades and keep as many of the 7,600 jobs as possible.
Prime would also need to continue participating in the Medi-Cal managed care and Medicare programs for at least 10 years, among other conditions, the San Jose Mercury News reported. The 150-year-old Daughters of Charity chain is known for serving the poor.
The consultant, Medical Development Specialists, said the requirements would "minimize any potential negative healthcare impact." Attorney General Kamala Harris, who must approve the sale, commissioned the report.
Prime said it in a statement that it "remains committed to saving the Daughter of Charity Health System's hospitals and continuing their legacy and service to their communities." It plans on a detailed response before Jan. 2, as Harris requested.
Robert Issai, Daughters of Charity's president and chief executive officer, said his overall takeaway from the consultant's report was positive.
"I did not see anything that said, 'You should not sell to Prime,' " he said. "Prime is really the only one that can save these hospitals (from bankruptcy). This is positive; it gives us a road forward."
Prime operates 29 hospitals in California and eight other states. In October, it announced an agreement to buy the hospitals from Daughters of Charity, which had been seeking a buyer. The sale price has not been disclosed.
Issai said Prime's bid "was superior to all others" and that Daughters of Charity talked to 133 interested parties before deciding on four finalists.
For years, Prime has faced criticism and government investigations surrounding its billing practices and handling of patient privacy. The Service Employees International Union has criticized the deal.
"These reports confirm the overwhelming distrust in Prime Healthcare continuing the Daughters' mission of meeting community needs," said Dave Regan, president of SEIU-United Healthcare Workers West.
Harris has until Feb. 6 to approve or reject the sale or impose conditions.