Attorney General Tries to Block Sale of St. Louise Hospital

The California Department of Justice is trying to block the sale of O’Connor and St. Louise hospitals to Santa Clara County. State Attorney General Xavier Becerra has filed an appeal of the U.S. Bankruptcy Court’s sale order by requesting a stay of that order, asking the court to stop the sale.

On Thursday, the the U.S. Bankruptcy Court in Los Angeles set a hearing date regarding the stay for Jan. 30. A delay could end the deal between Verity Health Care System and the county, leaving the future of the Gilroy and San Jose hospitals uncertain.

A stay will cause a breach of the purchase agreement between Verity and the county, and could prevent the sale. “Since the county was the only party to bid on Verity’s hospitals in Santa Clara County, it is likely that such an action would cause the closure of O’Connor and St. Louise hospitals,” said County Executive Jeff Smith.

If the court denies the stay at the Jan. 30 hearing, the attorney general can appeal the decision and cause further delay of the sale.  “Our concern is that if the transaction is not completed on time, the deal is dead and the future of the hospitals is uncertain,” Smith said. “The Attorney General’s actions to block the sale of Verity’s hospitals to the county is a real threat to the health of our community, our residents and the vulnerable populations the hospitals serve.”

On Dec. 27, the U.S. Bankruptcy Court approved the county’s bid to acquire O’Connor Hospital in San Jose, St. Louise Regional Hospital in Gilroy, and DePaul Health Center in Morgan Hill for $235 million.  The county would be adding the hospitals to its health system which already includes Santa Clara Valley Medical Center in San Jose.

The hospitals all share the county’s mission to provide high quality, compassionate, and accessible healthcare, according to Smith. “As a public hospital system, the county provides care to all people living in Santa Clara County, and this acquisition would support the county’s ability to serve even more residents in the community,” he said.

“County leadership is already working on transition planning with the leaders, managers, and employees in these hospitals in preparation for an expected late-February ownership change, and to make the transition as seamless as possible,” Smith went on. “Adding these hospitals to our health system would ensure the continued availability of essential healthcare services that their communities have depended on for more than a century. Because of this attempt to block the sale, our efforts and the viability of these community hospitals are now in jeopardy.”

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This story will be updated as more information becomes available. 

2 Comments

  1. Not that I’m for the purchase of these hospitals by the county, but what’s the reason DOJ is blocking the deal?

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