Attorney General’s Brokered Deal In Queen Of Angels Hospital Merger Still Falls Short Of Community Needs

Press Release

May 14, 1998

Contact:
Julio Mateo, Consumers Union,
415/431-6747
Consumers Union West Coast Regional Office

ATTORNEY GENERAL’S BROKERED DEAL IN QUEEN OF ANGELS HOSPITAL MERGER STILL FALLS SHORT OF COMMUNITY NEEDS

SAN FRANCISCO, CA. – Consumer and community groups monitoring the proposed sale of Queen of Angels/Hollywood Presbyterian Medical to Tenet Health Care Corporation today announced that the new deal brokered by Attorney General Dan Lungren still falls short of the community’s needs. While the new deal offers improved benefits for the community, the groups believe the deal’s significant shortfalls require the Attorney General to reject this sale in the public interest.

Last week, the Attorney General released details of a modified deal between Queen and Tenet, the second largest for-profit hospital chain in the country. Since that time, Consumers Union, nonprofit publisher of Consumer Reports magazine, and the Los Angeles Coalition for Quality Health (which represents over 50 community, civic, labor, and religious groups) have been attempting to meet directly with the Attorney General to express community concerns about the terms. In a letter issued yesterday, the Attorney General summarily dismissed the groups’ concerns, and refused to meet with them directly. The Attorney General is expected to approve the deal by Friday, despite public opposition.

"We believe that the problems with this deal have not been adequately addressed by the Attorney General," said Julio Mateo, Jr., a staff attorney with Consumers Union’s West Coast Regional office. "While the modified terms are an improvement over the original deal, the Attorney General should reject it to adequately protect the local communities’ access to essential health care."

"The terms brokered by the Attorney General dramatically increased Tenet’s indigent care and community services commitment," said Mateo. "But the mandated levels are still less than what Queen is currently providing."

However, Consumers Union notes the following shortcomings in the new deal based on the facts of this transaction and the law governing its review:

The sale terms allow for a 10% reduction in Emergency Room services at the hospital;
The funds set aside for the new Queenscare foundation, which will result from the sale of this hospital, are insufficient for adequate service provision because the funding levels established are based on past subsidy amounts. Also, there are no guarantees that services will continue to be provided, other than Tenet’s agreement to provide 90% of basic emergency room care;
Allowing some of the current Queen of Angels board members to serve on the board of Queenscare jeopardizes the integrity of the funds. Based on potential breaches of fiduciary duty by these board members, questions remain about their judgment and capacity to administer these funds in the interests of the community;
Tenet’s indigent care commitment will decrease over time since there is a fixed expenditure and the amount is not a percentage of gross revenues, nor is there an adjustment for inflation.
AIDS services will be negatively impacted. Queenscare has agreed to provide a fixed amount of $2 million for a fund for AIDS services. According to the Lewin Group’s final report, approximately $100,000 will be granted by this fund in its first year. However, Queen currently operates the Chalet, one of the few facilities in L.A. which accepts Medi-Cal insured HIV/AIDS patients and maintains 87 staffed skilled nursing beds. Tenet has made no guarantees to continue to provide these services.
Projected funding levels for the Queenscare Franciscan Clinics and Hollywood Health Partnership may not be adequate to ensure the continued availability of these programs to the community.

With the enactment last year of AB 3101, the Legislature increased the Attorney General’s responsibilities to oversee hospital conversions from nonprofit to for-profit status. Contrary to the Attorney General’s stated position in the letter he issued yesterday, in addition to enforcing the law, the Legislature specifically authorized the Attorney General to consider the broader public policy question of whether the transaction is in the public interest and whether the transaction will have an adverse impact on the availability and accessibility of health care in the affected community. In his May 12 letter, the Attorney General refused to exercise this authority.

"Health care deficits still exist, which must be addressed before the deal is approved," said Lark Galloway-Gilliam, Executive Director of Community Health Councils, Inc., and a leader of the Coalition.

"It is the community that loses in this deal," said Sister Carolita Hart of the Archdiocese of Los Angeles.

A two-page chart prepared by Consumers Union analyzing community concerns regarding the original deal and the new terms follows.

###

[ Health ] [ Finance ] [ Food ] [ Product ] [ Other ]
[ About CU ] [ News ] [ Tips ]
[ Home ]