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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:
A copy of the conditional approval letter is available here.