Prime backs out of acquisition due to 'unprecedented' conditions

Citing what it says are burdensome conditions set by California Attorney General Kamala Harris, Prime Healthcare has pulled out of a deal to buy six struggling Catholic hospitals, according to the San Francisco Chronicle.

In late February, Harris approved Prime's bid to acquire the Daughters of Charity healthcare system for $843 million but placed numerous conditions on the deal, including requiring that Prime keep the facilities open for at least the next decade, maintain existing governmental healthcare service contracts, and guarantee employee pensions and benefits.

The total conditions exceeded 300, which Troy Schell, Prime's general counsel, said was unprecedented. Prime estimated that complying with Harris' requirements would cost the hospitals nearly $3 billion over the 10-year period. The collapse of the deal leaves Daughters of Charity's hospitals up in the air. The requirement they remain open for 10 years was the major bone of contention, according to Daughters of Charity President and CEO Robert Issai, who told the Chronicle he was unsure the requirement was cause for scrapping the entire deal.

"Simply put, we disagree with their assertion the conditions were onerous," he said, adding that the system is now focused on a new buyer. Oakland-based Service Employees International Union-United Healthcare Workers West expressed hope that the deal's collapse would allow alternate buyers "more compatible with Daughters' commitment to public health to jump in immediately," SEIU-UHW President Dave Regan told the Chronicle. SEIU-UHW opposed the deal and has long had an adversarial relationship with Prime, accusing its founder, Prem Reddy, M.D., who said the union has accused the company of overbilling Medicare and slashing vital services at the struggling providers Prime has acquired in the past.

Prime's decision, Harris said, demonstrates its commitment to profit over meeting community health needs, which she said substantiates  many of the criticisms Prime faced during the decision-making process.

To learn more:
- read the article

Suggested Articles

Corporate, private equity and investment banking executives are eyeing more investments in health IT in 2020, according to a survey from KPMG.

Medicaid enrollment churn eased following the rollout of the Affordable Care Act, a new study shows. 

Today’s advances in medicine enable the successful management of diseases for which there were once few effective treatment options—at a high cost.