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Labor Council

Labor, Community Groups Call for Maintaining Safe Staffing Levels and Charity Care at Seton Medical Center, Seton Coastside

February 2015

The California State Attorney General’s office held a series of public hearings last month on the proposed sale of Seton Hospital and Seton Coastside by Daughters of Charity Health System to Prime Healthcare Services.

Representatives from the San Mateo County Central Labor Council’s non-profit Union-Community Alliance spoke at the two hearings held January 9 in Moss Beach and Daly City. The Seton Medical Center in Daly City and Seton Coastside in Moss Beach are two of the six Daughters of Charity (DOC) hospitals in California the DOC wants to sell to Prime Healthcare Systems.

By law, California Attorney General Kamala Harris has jurisdiction over the proposed sale, and will make a final decision by February 6 to approve or reject the sale or set conditions. The Labor Council has not taken a position on who buys the hospital system, but expressed concerns about maintaining safe staffing levels and charity care.

“We are concerned there is no condition regarding staffing levels,” said San Mateo County Union Community Alliance (SMCUCA) Organizer Bradley Cleveland. “To maintain current services levels, we believe the Attorney General should require that the new owner maintain current staffing levels. We ask that you include a condition regarding maintenance of staffing levels and retention of current employees, labor agreements and pension obligations.”

SMCUCA called for the buyer to commit to maintaining specialty care services and charity care services for 10 years. “We agree that commitments should be indexed, but this should be the minimum commitment. The level of charity care, in particular, should be closer to the statewide average of two percent,” said Cleveland.

The San Mateo Daily Journal reported that, “Prime has promised to keep the financially strapped system hospitals open at least five years, maintain existing services, spend $150 million on capital improvements over the next three years and protect 7,600 jobs at the acquisitions.”

The Labor Council’s Community Services Director Rayna Lehman said, “We generally support the conclusions contained in the report prepared by Medical Development Specialists on the sale of Seton Medical Center and Seton Coastside. We ask that all conditions should remain in place for 10 years.”
In their report on the sale, Medical Development Specialists (MDC) recommended that California regulators condition the sale of the hospitals on a commitment from the buyer to keep the facilities open for 10 years and participate in the Medi-Cal and Medicare programs for at least as long.

Seton Medical Center in Daly City provides affordable healthcare to the northern portion of San Mateo County, and had 26,955 emergency room visits in 2013, with 12,244 of those from low and moderate income visitors, according to the MDS report. MDS CEO Phil Dalton said closing Seton would create severe health care accessibility issues, and recommended requiring that Prime maintain $1.9 million in charity care.

The Daughters of Charity System began soliciting bids for the sale of its hospitals in 2013, and in October 2014, the DOC’s Board selected the offer proposed by Prime. The MDS report noted that, “[The] Daughters’ Board believed Prime’s proposal satisfied the selection criteria and that no other proposal demonstrated similar strength. Daughters’ Board stated Prime was the only candidate that was able to fully fund the employee pensions and who made the commitment for all of the capital required to close the transaction. Additionally, Daughters’ Board believed that Prime’s offer materially exceeded the other offers, and provided a higher level of assurance, relative to the other bidders, in terms of Prime’s balance sheet, experience in operations, depth of existing operations to support the Health Facilities, and access to capital in order to ensure that the assumed liabilities were honored in the long-term.”

According to the MDS report, Seton hospital ran an $18.9 million deficit in fiscal year 2014 and a $28.3 million deficit in fiscal year 2013. The hospital chain borrowed $125 million last year, which must be repaid by July 10, 2015. If the DOC hospital chain defaults, it could face bankruptcy or closure of one or more hospitals.

The Service Employees International Union – United Healthcare Workers (SEIU-UHW) has expressed opposition to the sale of the DOC hospitals to Prime Healthcare, saying the company has a history of reducing services and slashing workers’ pay and benefits. SEIU-UHW has 3,700 members at the Daughters of Charity facilities and three Prime-owned hospitals in California.

The DOC cited as one criteria for choosing a buyer, “the likelihood of the bidder to require bankruptcy proceedings in order to reduce liabilities as a condition of closing” the sale, according to the MDS report. SEIU contends that Prime could use the threat of bankruptcy to get major contract concessions from the unions representing the workers in the facilities.

The California Nurses Association, representing 1,800 Daughters of Charity RNs, supports the sale of the DOC hospitals to Prime. According to a CNA press release, “Prime is the only viable offer that would avert closure, and stave off a deepening public health crisis. With the Daughters of Charity Health System losing nearly $10 million a month, Prime has committed to keep all six hospitals open for a minimum of five years, protect most of the existing 7,600 jobs, pay off nearly $750 million in tax-exempt bonds, pension and other debts, and commit an additional $150 million to hospital improvements.”

The Labor Council’s Rayna Lehman said Seton Medical Center still needs to be seismically upgraded to comply with California laws requiring hospitals to be better prepared to withstand a major earthquake. “The cost of seismic retrofit / replacement is $249 million. The proposed $157 million referenced in the MDS report is inadequate and the additional $150 million capital commitment spread out over all six DOC hospitals should be over and above the costs of the hospital replacement,” she said. “We ask that construction of the new patient tower be accomplished under the terms and conditions of a project labor agreement with the local Building and Construction Trades Council.”

Labor’s community partners also expressed concern about the sale. United Way of the Bay Area policy analyst Will White noted that Seton Hospital has been a critical source of care for low-income county residents, particularly the Medi-Cal/Medicare population and the uninsured. Due to its high level of exposure to this patient population, the sale of Seton Hospital raises concerns over the continued access to care for many of the county’s low-income residents.

San Francisco Organizing Project/Peninsula Interfaith Action members urged the Attorney General to require the hospital’s new owner to continue participation in the Medi-Cal and Medicare managed care programs and continue to serve low-income populations with the same level of service and quality provided by the Daughters of Charity for a 10-year period or more following the sale.

- Paul Burton




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