After collapse of Prime deal, other interested providers may step up

After Prime Healthcare Services withdrew from its purchase of California's embattled Daughters of Charity Health System, several other potential buyers have expressed interest, according to the San Jose Mercury News.

The chain, which is nearly bankrupt, was set to be acquired by Prime after California Attorney General Kamala Harris approved the controversial deal with numerous conditions. Those conditions led Prime to withdraw from the deal, claiming the stipulations were burdensome and "unprecedented," FierceHealthFinance previously reported. Since the collapse of the deal, several for-profit companies have approached Daughters of Charity, including Alecto Healthcare Services, whose owner is the brother-in-law of Prime founder and CEO Prem Reddy.

Hospital Corporation of America has also expressed interest in the hospitals, as did New York private equity firm Blue Wolf Capital, which bid for them in the last round. Three major nonprofit systems, Kaiser Permanente, Dignity Health and Sutter Health, all told the Mercury News they had no interest in acquiring any of the six hospitals. San Mateo County Manager John Maltbie said the county is potentially interested in the Seton Coastside facility, but not Seton Medical Center due to the high cost of retrofitting the facility to withstand earthquakes.

Nor did Prime rule out acquiring one or more of the system's six facilities, according to the article. "If Prime was offered an opportunity to ensure their sustainable future, we would do what is best for the hospitals and their communities," Prime Vice President Kavitha Bhatia, who is also Reddy's daughter, told the Mercury News.

One of the primary points of contention in Harris' conditions would have required Prime to keep four of the six hospitals, several of which are not currently turning a profit, open for the next 10 years as acute care facilities. However, Harris said those conditions would not be uniform for any interested buyers. "Each case is unique to its facts," Harris said. "The offer we made to Prime was unique and tailored to Prime."

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