September 20, 2011 11:54 AM
Tomoya Shimura
Staff Writer

VICTORVILLE • The High Desert could lose one of its three major hospitals after Attorney General Kamala Harris on Tuesday rejected Prime Healthcare Services Foundation’s plan to buy Victor Valley Community Hospital.

“We have concluded that this proposed sale is not in the public interest and will likely create a significant effect on the availability or accessibility of health care services to the affected community,” Acting Chief Deputy Attorney General Michael Troncoso said in a release announcing the decision.

CEO Catherine Pelley of VVCH announced during a public hearing last month that she’ll be retiring Sept. 30 and would start closing the Victorville hospital if the purchase deal hadn’t gone through.

Pelley wasn’t available for an interview Tuesday to clarify if she will stand by her words to shut down the hospital. Hospital officials said they didn’t have enough information to comment on the matter.

“The attorney general’s inexplicable and unexpected decision could have an immediate and dire impact on the needs of an already underserved High Desert community,” Prime stated in an emailed release.

Prime characterized Harris’ decision as political, influenced by a labor union that supported her during her election campaign last year.

The Service Employees International Union has been criticizing Prime’s management saying that it puts profits over patients. Prime has called it an attempt by the labor union to increase its pool of dues-paying members.

“Without giving any specific reasons for the denial, she clearly has chosen to use the legal authority of her office to make league with one particular labor organization that has been running a blatantly false smear campaign of vilification against hospitals operated by Prime Healthcare,” Prime stated.

Spokeswoman Lynda Gledhill of the Department of Justice said she couldn’t go into specific reasons Harris rejected the deal.

“Our decision is based on the material contained in the notice, the results of our investigation, public records, the reports of our consultants and advisors, and comments received from the public, the parties and potential alternative bidders,” Troncoso stated.

Medical experts hired by the AG’s office to assess the effect of the potential acquisition by Prime concluded that the High Desert needs to keep VVCH open, but if the AG were to approve the deal, Prime should meet certain conditions. (Click here to read the AG’s impact report.)

VVCH filed for Chapter 11 bankruptcy protection last September.

The nonprofit hospital’s finance suffered from high amounts of uncompensated care to uninsured and low income members of the community. Pelley said 70 percent of the patients are on Medi-Cal, Medicare or charity care.

KPC Global Care beat out Prime with a $37 million bid in a November auction and got the AG’s approval, but KPC failed to seal the deal by the May 31 deadline. Then a federal bankruptcy court judge approved an agreement allowing Prime Healthcare Service Foundation, Dr. Prem Reddy’s nonprofit arm, to purchase the hospital for $35 million.

KPC is still interested in buying the hospital, Executive Vice President Bill Thomas said Tuesday.

The deal fell through in May because financial statements from the hospital didn’t match up with other reports KPC had, and the time ran out before the parties could reconcile the differences, Thomas said.

“We figured that out and now we look forward to working with the hospital to close out this transaction assuming the hospital is willing to negotiate with us,” Thomas said.

KPC has enough money to make the purchase, Thomas said. However, he said company representatives hadn’t talked to VVCH since the deal fell through.

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