Potential sale of DCHS hospitals draws criticism, opposition
State legislators, community members, faith leaders and healthcare workers gathered at St. Vincent Medical Center Aug. 15 to express their opposition to the potential sale of six California safety-net hospitals to for-profit Prime Healthcare. Its owner has threatened to put the hospitals into bankruptcy if he buys them and can’t get major concessions from the unions representing the workers in the facilities.
Prem Reddy, Prime’s chairman and CEO, made the threat three separate times in a recent meeting with Dave Regan, president of SEIU-United Healthcare Workers West, which represents the workers in the Daughters of Charity Health System. The six DCHS hospitals include St. Vincent Medical Center in Los Angeles and St. Francis Medical Center in Lynwood, as well as Seton Medical Center, Daly City; Seton Coastside, Moss Beach; O’Connor Hospital, San Jose; and St. Louise Regional Hospital, Gilroy.
Prime has submitted a bid to purchase all six hospitals. DCHS, an important provider of health care to low-income people throughout the state, has been in financial danger for more than a year, losing approximately $10 million a month since January. The DCHS board of directors announced Jan. 13 that it would solicit proposals from Catholic, public, non-profit and for-profit organizations to purchase the six hospitals individually or the health system in its entirety.
“In his pursuit of these hospitals, Prem Reddy is now resorting to threats to stop our union and Daughters of Charity workers from opposing the sale,” said Regan. “He appears willing to decimate healthcare in these communities to get what he wants.”
“Prime Healthcare is telling the Daughters that they will take care of everybody, but they’re not meeting with us,” said Regan. “If they get lead bidder status, they will control the timing of the process and never take responsibility for the pensions. Then the pension plan with its 12,000 active and retired enrollees will go bankrupt.”
Regan told The Tidings that SEIU will protest if Prime is granted lead bidder status. The lead bidder announcement is expected in early fall.
“We will oppose the transaction, but the real problem is the system will continue to hemorrhage money, and then Prime can pick up the hospitals at fire-sale prices,” said Regan. He noted that Blue Wolf Capitol Partners, a major private equity firm, is also submitting a competitive bid and has pledged to maintain the community-based, safety-net approach that has characterized the Daughters of Charity system, as well as protect the system’s caregivers.
“We have to find somebody who shares our values and can preserve the DCHS mission and do right by the workforce,” said Regan.
“Our hospitals are rooted in caring for all of the community, and we can’t afford to see these hospitals fall into the wrong hands,” said Stanley Clay, a pharmacy technician at St. Vincent Medical Center who spoke at the Aug. 15 press conference.
“After working 41 years, I was planning on retiring next March, but I don’t know what’ll happen if Prime takes over and puts us into bankruptcy. It’s scary because if they wipe out my pension I’ll need to find a new job and that’s not easy when you’re 65 years old.”
Veronica Tench, 65, a phlebotomist at St. Vincent’s since 1981, told The Tidings in a phone interview that she thinks a lot about how the sale of the hospital will affect her pension (she plans to retire next year) and the workplace.
“With the pending sale, the morale is low, but people continue to work and hope that it’s not as bad as it seems,” said Tench, who added that patients “have no idea of what’s going on.”
In an emailed statement to The Tidings, Elizabeth Nikels, DCHS vice president for marketing and communications, noted that there is no set date for the sale of the six hospitals.
“Our final decision,” Nikels wrote, “will take into account the needs of all our stakeholders, especially our staff, physicians and the communities we have served for more than 160 years. The Daughters of Charity are seeking a buyer who we hope can protect the legacy of care the Daughters of Charity have built, maintain operations, preserve jobs and provide community access to affordable, high-quality health care for years to come.
“The union protests about a particular buyer are premature and unfortunate; we have not made a decision. While the unions and other interest groups appear to be pushing for their own bidder to purchase DCHS, we must act in the best interest of all our associates, physicians and the community — and they should be reassured by our fair sale process.
“Any purchaser of DCHS must adhere to more than a dozen specific standards outlined by our board of directors, among them a willingness to invest in capital improvements, be financially stable enough to avoid putting the hospitals through disruptive bankruptcy proceedings, have a history of successfully managing hospitals in California, and be willing to close the sale on a timeline set by our board of directors.”