Prime Healthcare Completes $350M Acquisition of Bankrupt St. Francis

The deal was finalized over the strong objections of healthcare unions.

Prime Healthcare this week finalized its $350 million acquisition of the bankrupt St. Francis Medical Center in Southeast Los Angeles County.

In a media release, for-profit, Ontario, California-based Prime said the acquisition signals "a new era of service excellence and award-winning healthcare for an essential medical facility in Los Angeles County."

"Prime is prepared to lead St. Francis into a bright future and we are grateful for the opportunity along with the support we have received from the community," said Sunny Bhatia, MD, CEO of Region I of Prime Healthcare.

Prime bought the 384-bed nonprofit hospital in Lynwood, California from Verity Health System of California, Inc. over the howls of protests from the Service Employees International Union-United Healthcare Workers West, which had accused Prime of a "history of bilking taxpayers and cutting services."

"Prime's shocking history of deceit, fraud and repeated elimination of health services that patients depend on is simply out of step with owning a hospital like St. Francis, which is a lifeline to the people of Lynwood and surrounding communities," said Mauricio Medina, a certified nursing assistant at St. Francis and a member of SEIU-UHW.

The union had petitioned California Attorney General Xavier Becerra to scotch the deal, which transitions the hospital to for-profit.

Instead, Becerra gave the deal his "conditional approval."

“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," Becerra said. "No change in ownership, no bankruptcy filing can be allowed to diminish that priority."

Prime was the highest bidder for the hospital in the U.S. Bankruptcy Court for the Central District of California, and the acquisition was finalized after a contentious four-month review and public hearing process.

Under the terms of the acquisition, Prime committed more than $350 million to the hospital, which includes a $200 million base price and $15 million in payroll and benefits upgrades for staff.     

Rich Adcock, CEO of Verity Health, said Prime was the "only bidder with the fortitude to support the hospital in its time of greatest need, despite the burden of the pandemic, the uncertain future and economic impact on hospitals."