par John R. Fischer
, Senior Reporter | April 13, 2020
Prime Healthcare has received the green light to proceed with its acquisition of St. Francis Medical Center from Verity Health for a net consideration of $350 million.
The U.S. Bankruptcy Court for the Central District of California in Los Angeles approved the asset purchase agreement, which includes a base price of $200 million and $15 million in payroll and benefits for staff.
“Our agreement with Verity reflects our decades-long mission of saving, improving and investing in community hospitals,” said Dr. Sunny Bhatia, Prime Healthcare’s Region 1 CEO and corporate chief medical officer, in a statement. “We are honored and look forward to continuing St. Francis’ legacy of compassionate, critical medical care for the communities it serves, especially during this unprecedented health crisis.”
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Prime has pledged to invest $47 million to fund capital improvements in the Lynwood-based hospital, including in technology and system upgrades. The practice will remain fully operational during the closing process for the sale, with Prime supporting staff as they treat patients affected by the COVID-19 pandemic.
It has also made offers of employment to substantially all St. Francis employees and agreed to preserve the hospital, trauma care, service lines, charity commitments and community benefits programs. All were included as conditions for the sale issued by the Attorney General and Bankruptcy Court.
The 384-bed hospital has been up for sale since 2018 when Verity filed for bankruptcy, according to Becker’s Hospital Review
“St. Francis Medical Center plays a crucial role in providing high-quality care for patients in Lynwood and the surrounding communities,” said Rich Adcock, CEO of Verity Health, in a statement. “Prime has time and time again saved hospitals to support communities. We are confident that Prime will continue this record of excellence and look forward to working in partnership through the sale close process.”
The company has also been working to sell St. Vincent Medical Center in Los Angeles. It recently considered selling the shuttered practice to the Chan Soon-Shiong Family Foundation for $135 million. Dr. Patrick Soon-Shiong and his wife, Michele B. Chan head the foundation and seek to reopen the facility as a COVID-19 care and research center during the pandemic. He said last week that he will seek to purchase the medical campus personally rather than use a foundation to facilitate the sale, a decision that raised objections by California Attorney General Xavier Becerra, according to the Los Angeles Times
“We made a good faith bid to acquire St. Vincent Medical Center, in the hope that it would enable the state to prepare the facility for the surge in COVID-19 cases that is certain to come,” Soon-Shiong said in a statement Wednesday. “Although our tax attorneys had assured us that the foundation’s bid complied with all state and federal laws, we have informed those attorneys that I shall fund the purchase personally, instead of through the foundation, so as to avoid the baseless appearance of a conflict.”
The sale of St. Francis Medical Center is being conducted under a court-supervised process as part of Section 363 of the Bankruptcy Code and is subject to regulatory review, in addition to other closing conditions.