Attorney General Becerra Conditionally Approves Sale of St. Francis Medical Center

State law requires Attorney General oversight of the sale of non-profit health facilities 

SACRAMENTO – California Attorney General Xavier Becerra issued a letter conditionally approving the sale of St. Francis Medical Center, a Verity Health System (Verity) medical facility in Los Angeles County, to Prime Healthcare, Inc (Prime). Under California law (Corporations Code section 5914 et seq., and California Code of Regulations, title 11, section 999.5), any proposed sale of a non-profit health facility to a for-profit corporation must secure the approval of the state Attorney General, whose statutory charge is to consider the factors set forth in the law, including whether the transaction is in the public interest and whether the transaction affects the availability or accessibility of healthcare services to the affected community. The Attorney General’s conditional consent represented in today’s letter seeks to protect access to care for the Los Angeles communities served by the hospital. If Verity and Prime close on the sale with the conditions outlined in the letter, they are consenting to comply with the conditions. The transaction must still be approved in Court where Verity has filed for bankruptcy.

“The California Department of Justice has a responsibility to the families who live around and rely on St Francis Medical Center. The COVID-19 public health crisis has brought home the importance of having access to lifesaving hospital care nearby in our communities,” said Attorney General Becerra. “The conditions we have attached to the proposed sale of St. Francis focus on maintaining or improving care and services at the hospital – from treatment for COVID-19 to cancer and emergency care. No change in ownership, no bankruptcy filing can be allowed to diminish that priority. St. Francis Medical Center is not just an asset, it is an indispensable neighbor, it is the workers who serve the patients, and the doctors who save lives. We conditionally approve this sale to keep it that way.”

The Attorney General’s conditions are based on an independent health expert’s in-depth analysis of the health and medical needs in the surrounding communities. Among other things, these conditions call for Prime, the prospective purchaser, to: 

• Maintain Operations at the Hospital: 
  • Requires that Prime keep St. Francis open for at least ten years after sale and continue operating as a Trauma II Center. St. Francis will continue to provide cancer services, cardiac services, women’s health services, neonatal intensive care, perinatal and pediatric services, psychiatric and other critical services recommended by the health expert;

• Strengthen Charity Care Policy:
  • Requires that Prime increase of its reach of charity care policy at St. Francis by covering care in full, serving those who earn at the 400 percent of federal poverty level ($51,040 for an individual and $86,880 for a family of three) and up to 600 percent of federal poverty for the discount payment policy;
  • Requires that Prime commit $10,186,173 in charity care for patients in the surrounding community, and Prime has agreed to improve its charity care policies to cover significantly more patients;

• Increase Community Benefits:
  • Requires that Prime increase the community benefit of St. Francis to $1,597,077 for six years exclusive of any grants received, to support the Southern California Crossroads Program, the Health Benefit Resource Center, Welcome Baby Program, Healthy Community Initiatives, American Career College access for onsite training, Paramedic Training and Education, and Patient Transportation Support;

• Maintain Hospital Staff and Medical Providers:
  • Prime is required to maintain admitting privileges for staff in good standing, maintain on-call coverage contracts and comparable arrangements with physicians at fair market value to maintain Level II trauma care at St. Francis; 

• Maintain Safety in Hospitals:
  • Requires that Prime commit the necessary investments required to maintain seismic compliance at St. Francis. Prime will be required to expend at least $35 million for capital improvements, excluding seismic retrofit costs, at St. Francis Medical Center over the five-year period from the closing date, including but not limited to upgrading its electronic medical records system.  The expert report identified seismic issues at St. Francis; and

• Maintain Access to Care for Women and LGBTQ individuals:
  • Prime is required to maintain access to women’s healthcare services for ten years, and no limitations on LGBTQ healthcare services offered at St. Francis.

 A copy of the conditional approval letter is available here.