Controversial proposed sale of health system in hands of attorney general

State Attorney General Kamala Harris must soon decide whether to approve the proposed sale of the Daughters of Charity Health System — which includes Seton Medical Center in Daly City — to Prime Healthcare, a for-profit organization currently operating 27 hospitals in California and around the country.

Harris hosted a public hearing on the matter in Daly City on Friday and listened to hours of testimony from health care workers, elected officials, union representatives and residents, with some speakers staunchly opposing the proposed sale and others adamantly supporting it.

The meeting was the culmination of a series of hearings the attorney general held in the South Bay and on the Peninsula last week, in communities where other Daughters of Charity facilities are located.

Some speakers opposing the sale claim that Prime Healthcare has a history of eliminating services and laying off workers, and charge that the organization has too many legal problems, which include allegations of fraudulent Medicare billing and violations of patient confidentiality.

Opponents also claim the organization has pledged to invest $150 million in capital improvements to Daughters of Charity hospitals that won't cover all the improvements needed at the San Mateo County Health System's six facilities, especially given the major seismic retrofitting Seton must undergo by 2020.

Sale supporters counter that Prime is the only buyer that submitted a proposal meeting all the requirements the Daughters of Charity had identified, such as honoring existing pension agreements, retaining most employees with similar contracts, and continuing to serve low-income patients.

Supporters also maintain that if Harris does not approve the transaction, the Health System's financial troubles might force it to close its hospitals. Daughters of Charity Chief Financial Officer Annie Melikian noted that the organization had just 14 days worth of cash reserves.

Numerous Seton doctors, nurses and administrators at the event said they are in favor of the sale, which they believe is necessary to protect the hospital from potentially closing.

But Prime drew attacks from some of its own employees at the hearing. A nurse from Centinela Hospital in Inglewood claimed the quality of care at that facility has diminished since Prime took over in 2007, so much so that when one of her co-workers became a shooting victim, he insisted paramedics take him to a different hospital.

Garden Grove Hospital admitting representative Kim Davis testified that middle management at the facility was “wiped out” after Prime took over, and remaining workers were forced to take on managers' duties.

Davis expressed skepticism about Prime founder Prem Reddy's assurances that existing labor contracts would be honored and employees retained.

“When he tells you he's going to honor your collective bargaining agreement, boy, that would be great,” Davis said sarcastically.

San Francisco Supervisor David Campos — who was among the elected officials who spoke — took no position on the sale but urged Harris to enact “strong safeguards” to ensure that current service levels at Seton are maintained.

Lamont Bishop, speaking on behalf of state Sen. Mark Leno, D-San Francisco-San Mateo County, opposed the sale, citing fraud allegations and claiming Prime has a history of unfair business practices. Jennifer Kwart, who spoke on behalf of Assemblyman David Chiu, D-San Francisco, echoed that sentiment.

Also opposing the sale were Daly City City Councilmembers Mike Guingona and Judith Christensen, who questioned whether Prime, which has promised to keep Seton open for at least five years, was committed to performing the needed seismic upgrades and keeping the facility open beyond 2020.

Daly City Councilman David Canepa, who last year spearheaded a resolution calling upon Harris to review any potential sale of Seton, also urged Harris to make sure existing services at the hospital are not reduced.

But in expressing his support for the potential sale, Canepa explained that despite his initial skepticism, he has come to believe that Prime's proposal is the best option for guaranteeing that Daly City would continue to have a full-service hospital with emergency, acute-care and child birth departments.

Under state law, the Daughters of Charity's status as a nonprofit health care provider gives the attorney general veto power over its potential sale. Harris told The San Francisco Examiner her decision would be made by Feb. 13.

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