Health

How the Attorney General will decide on the Daughters of Charity hospitals sale

California Attorney General Kamala Harris.
California Attorney General Kamala Harris.
Richard Vogel/AP

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Friday is the deadline for Attorney General Kamala  Harris to decide whether to approve the sale of the non-profit Daughters of Charity hospitals to for-profit Prime Healthcare.

The proposed deal has touched off controversy.  Critics say Prime would drastically cut services at the hospitals. Two of the six hospitals up for sale - St. Vincent in Los Angeles and St. Francis in Lynwood - serve low-income communities that don't have a lot of other large health facilities. The other four are in the Bay Area.

Prime says it wouldn't make major changes.

The dispute is a bit of a political minefield for Harris, especially now that she's running for the U.S. Senate.

We put together a Q&A to help you understand the process. 

Q. Why is the Attorney General involved in this deal? Does she get involved with every hospital sale?

No, Harris is reviewing this deal because California law requires the Attorney General to consent to any sale or transfer of a non-profit health care facility to a for-profit company. 

Q. What are the criteria the Attorney General uses in reviewing the pending sale? 

This is also outlined in state law. The Attorney General must consider many factors that range from making sure there is a fair market value to assessing whether the sale impacts the availability or accessibility of health care services to the community.

There are ways to measure those things but there are other criteria that are considered more subjective - such as making sure the sale is fair and reasonable to the nonprofit and whether the agreement is in the public interest. 

Q. Who is lining up for and against the sale?

On one side there is SEIU United Healthcare Workers West, which opposes the sale because it worries that Prime Healthcare will shut down critical units and reduce staffing. Another union - the California Nurses Association - is a prominent supporters of the sale, arguing that without Prime the hospitals will close. 

Q. What is Prime saying about its plan for the Daughters of Charity hospitals?

It's agreed to keeping the hospitals running as acute care facilities for at least five years. In terms of staff cuts, it says that at least initially it will only eliminate some middle management positions.

Q. Is Prime Healthcare a big player in the health care market?

Prime Healthcare is one of the largest health care systems in the country. It is owned by a cardiologist named Prem Reddy who made his name by buying healthcare facilities that were almost bankrupt and turning them around by trimming staff and eliminating certain services.

Prime is based on Ontario and it operates 29 hospitals across the country. Reddy got his start at Desert Valley Hospital. Some of the Southern California hospitals Prime owns are Centinela Hospital, Chino Valley Medical Center and Garden Grove Hospital.

Q. Harris recently announced she's running for Barbara Boxer's U.S. Senate seat. Does that complicate this decision?

Harris' office says the outcome will be based purely on the law and politics will not be a factor.

Political consultant Mike Madrid disagrees.

"There's no question that politics will come into play in this decision," he says. "This issue is largely...an internal family fight between two labor unions and as a result it becomes complicated for Kamala Harris who is looking to garner labor support in her... bid for the U.S. Senate."

Q. Is there any indication about which way Harris might rule?

No. However, this is not the first time Harris has reviewed a pending Prime acquisition. In the past she's reviewed four proposed sales, approving two and rejecting two. She said the two she rejected - including the 2011 proposed sale of Victor Valley Community Hospital in Victorville - were not in the public interest.

For Harris' deliberations on the current proposed sale, her office commissioned a report from an independent consultant.  The consultant didn't make a recommendation whether to approve the sale but it did predict that Prime will eventually cut more staff and try to get more concessions out of the hospitals' unions. The report recommended that if Harris is inclined to approve the deal, that she require Prime to commit to keeping the facilities open as acute care sites for at least 10 years, rather than the five it has agreed to.