California Attorney General tries to block sale of O’Connor and St. Louise hospitals to Santa Clara county

SAN JOSE — California Attorney General Xavier Becerra is trying to block the sale of two financially struggling hospitals to Santa Clara County, saying the county has not agreed to operate the hospitals under certain conditions that would protect healthcare access.

But county officials say the AG’s action would block the sale and shutter the hospitals entirely.

“Since the County was the only party to bid on Verity’s hospitals in Santa Clara County, it is likely that such an action would cause the closure of O’Connor and St. Louise hospitals,” said county CEO Jeffrey Smith.

The county’s $235 million purchase of O’Connor Hospital in San Jose and St. Louise Regional Hospital in Gilroy is part of a plan to relieve overcrowding at Valley Medical Center and expand the public health system to central San Jose and south county.

The county had offered to buy the hospitals as part of a bankruptcy reorganization by the hospitals’ parent company, Verity Health System of California. Verity had been in talks with more than 100 organizations looking at various parts of the hospital system, but none put in a bid, allowing the county to win by default.

The Attorney General has argued that the county, as part of the sale, should commit to following conditions it imposed on those hospitals in 2015, when the hospitals underwent another reorganization.

Then-Attorney General Kamala Harris, who is now a U.S. Senator, argued the conditions would preserve healthcare access by requiring the facilities to remain general acute care hospitals, provide 24-hour emergency medical services, provide the same level of service to Medi-Cal beneficiaries, and other requirements.

The county and Attorney General were in talks for weeks over the conditions, but have not come to an agreement.

“As we have stated before, the California Department of Justice is committed to advocating for conditions that ensure communities have access to essential healthcare services,” a spokesperson for the Attorney General said in an emailed statement.

The county is concerned the appeal, by delaying the sale from moving forward, will kill the deal entirely.

“Our concern is that if the transaction is not completed on time, the deal is dead and the future of the hospitals is uncertain,” Smith said. “The Attorney General’s actions to block the sale of Verity’s hospitals to the County is a real threat to the health of our community, our residents and the vulnerable populations the hospitals serve.”

In late December, U.S. Bankruptcy Judge Ernest M. Robles ruled that the California Attorney General’s office doesn’t have oversight over the sale of the nonprofit hospitals to a public entity and can’t block the sale.

Robles wrote in his ruling that the statutes that allow the Attorney General to intervene are aimed at preventing “charitable assets from falling into the hands of for-profit entities who would not continue to use those assets for charitable purposes,” and doesn’t apply to public agencies who have separate legal obligations to provide healthcare to the poor.

The Attorney General has appealed that ruling and is seeking to stay the sale order.

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Source:: The Mercury News – Latest News

      

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