LOS ANGELES — A union opposed to the sale of a nonprofit California hospital system to a for-profit operator has filed a National Labor Relations Board complaint as it fights to derail the transaction.
The SEIU-United Healthcare Workers West complaint alleges the Daughters of Charity Hospital System has violated federal labor laws by coercing workers into supporting a sale to Prime Healthcare, using threats and intimidation.
In the complaint, SEIU contends the hospital, and Robert Issai, DCHS' chief executive officer, are creating an atmosphere of fear at the hospital by stating the chain's six California hospitals will close or end up in bankruptcy if Prime doesn't buy the hospital system.
"Daughters has run a major campaign inside and outside all of its hospitals, including television and radio ads to bully workers into supporting the sale of DCHS to Prime Healthcare by threatening that the hospitals will close or go bankrupt and we will lose our jobs," said Marc Quarles, an ultrasound technician at Saint Louise Medical Center in Gilroy, Calif., in one of the complaints.
DCHS wants to sell the six-hospital chain to for-profit Prime Healthcare in an $843 million deal that would retire $409.5 million in junk-rated tax-exempt bonds.
The state attorney general's office held public hearings last week up and down the state in order to gather testimony about the sale of the hospitals. Attorney General Kamala Harris, who has to approve the sale of non-profit hospitals, is expected to make a decision by Feb. 13.
The issue with SEIU-UHW came about as a result of last week's hearings, Issai said.
"I was very honest during the hearings," Issai said. "This is not a scare tactic. These are the facts." The lenders on $30 million in bridge financing agreed to the short-term loan based on an agreement the hospital system would be sold by March 31, Isaai said. He added that the only buyer to emerge after an expansive nine-month bid process that met their pre-qualifications for a successful sale was Prime, an Ontario, Calif.-based hospital chain that owns 29 hospitals.
Based on the agreement, if it doesn't close a sale to Prime by the end of March the bonds could go into default, and the hospital chain could end up in bankruptcy, Issai said.
He questioned how it could possibly be beneficial for him to emphasize the dire financial situation in which the hospital chain finds itself while it is negotiating a sale. Issai said he had to underscore the urgency of the situation during the public hearings so that Harris understands the importance of the sale.
Although the hospital sale has support from the medical staff, two nurses unions and the hospital's administration, SEIU-UHW is not alone in questioning a sale to Prime.
Opposition has come from 19 legislators, county executives in Santa Clara and Los Angeles counties, and Treasurer John Chiang, who question whether selling to B-rated Prime, which has been the subject of investigations into its Medicaid billing practices, is a wise choice.
United Nurses Associations of California/Union Health Care Professionals, which represents nurses at St. Francis Hospital in Lynwood, also opposes the sale.
The hospital system has been losing $10 million a month for the past 12 months and currently has 14 days cash on hand, Issai said. The hospital system anticipates receiving its Medicare reimbursement in the next few weeks, however, which should fund operations through June, he said.
"We think there are other options," said David Miller, SEIU-UHW's research director.
He doesn't dispute that the hospital system is in bad financial shape, but describes a sale to Prime "burning down the village to save the village."
SEIU-UHW filed the complaints with the National Labor Relations Board to protect the workers from retaliation from the employer, Miller said. A favorable NLRB ruling would provide worker protections insuring that if Prime buys the hospital chain, employees who protested the sale aren't targeted with layoffs, Miller said.
SEIU-UHW wants hospital administers to reconsider another of the six finalist bidders, the New York-based private equity player Blue Wolf Capital Partners, LLC.
The hospital system has $284.5 million in long-term bond debt and $125 million in Series 2014 revenue bonds that mature on July 10, 2015, according to a consultant's report prepared for the attorney general's office. DCHS received a C-minus rating with a negative outlook from Standard & Poor's in December.
Prime, a for-profit hospital chain with 29 hospitals, would retire the outstanding tax-exempt bond debt as part of the transaction.
