Prime Healthcare's bid for six Calif. hospitals comes under scrutiny

Prime Healthcare Services, the Southern California-based, for-profit chain that has generated much controversy in recent years for its business practices, is making a bid to acquire six hospitals operated by the Catholic Daughters of Charity healthcare system.

The bid by Prime is unusual in that the system had been rebuffed twice by California Attorney General Kamala Harris to acquire other properties, although she and predecessors have approved a couple of other deals. In its most recent losing bid to acquire a hospital in the desert community of Victorville, Harris' office concluded that the sale would not be in the community's best interest, primarily due to Prime's "disturbing business model," according to the Los Angeles Times.

Prime has come under scrutiny for a variety of its business practices, which include canceling contracts with traditional insurers in order to bump up what it can charge its patients, and admitting more patients through its hospital emergency departments. Prime has also been criticized for billing for peculiar patient ailments, such as a rare form of malnutrition and wasting rarely seen outside of children in Africa. 

In the case of the Daughters of Charity acquisition, Prime has said it would keep the six hospitals open for at least five years, assume the system's debt and spend about $150 million on capital improvements.

Prime has the support of the California Nurses Association, a powerful labor union, but the deal is being derided by the Service Employees International Union.

"They have a long track record of providing care in a way that drives up costs and reduces quality," Dave Regan, president of the SEIU-United Healthcare Workers West, told the L.A. Times. "They're not a good citizen in the healthcare community."

A report commissioned by Harris' office involving St. Vincent Medical Center in Los Angeles concluded that the hospital should continue most of its specialty services for the next five years and spend at least $1.7 million a year on charity care and community benefits.

To learn more:
- read the Los Angeles Times article
- check out the report from the California attorney general (.pdf)

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