California attorney general stymies proposed joint venture by St. Joseph Health, Adventist Health
The California Department of Justice Thursday denied a proposed transaction between Adventist Health System and St. Joseph Health System that would have formed a joint operating company to manage their facilities across Northern California, including a number in the North Bay.
Attorney General Xavier Becerra’s office turned down the request saying it fails to protect consumers. Late Thursday, the facilities released a statement that they were “very disappointed” in the decision.
In June, the companies asked for approval to manage and have authority over each health system’s facilities in Humboldt, Lake, Mendocino, Napa, Solano and Sonoma counties. Adventist Health and St. Joseph Health’s operations include St. Helena hospital, Queen of the Valley and Santa Rosa Memorial. “The California Department of Justice is responsible for ensuring that any proposed sale or transfer of a non-profit health facility protects the health and safety interests of the surrounding community. After careful review we found this proposal falls short of protecting consumers,” said Sean McCluskie, chief deputy to the attorney general, in a news release.
Becerra’s office did not immediately respond to emailed questions on how the proposed move would not be in the public interest, potentially increase health costs and potentially limit access and availability of health care services, as the announcement claims.
The state DOJ supervises all charitable organizations in the state and referred to the California Corporations Code in its letter denying the transaction.
In a joint statement, both companies wrote, “Today, the Office of the Attorney General within the California Department of Justice (CA DOJ) issued a letter denying the proposed joint operating company between Adventist Health System and St. Joseph Health System, a proposed agreement that would have integrated clinical activities and services through a new joint operating company. Our proposed venture would have combined our services across clinics and facilities in Humboldt, Mendocino, Sonoma, Lake, Napa and Solano counties to lower the cost of healthcare and improve quality and access to care. The agreement has been under the regulatory review process since Spring, 2018.”
The statement continued, “Our intent has always been to better serve our communities, increase access to services, and create a stronger safety net for families in Northern California...At this time, our organizations will need to take a step back and determine implications of this decision. The well-being of our communities remains our top priority.”
The California Nurses Association has spoken out against what they refer to as a merger and doubled down on that position Thursday.
“The California Nurses Association opposed this proposed merger from day one, as we were very concerned the merger would mean a loss of services, particularly women’s health services and services for our LGBTQI patients. We know all too well that mergers most often result in service cuts and higher prices, both of which clearly have a negative impact on our patients and their health,” said Lesley Ester, an RN at St. Joseph’s Eureka hospital in an emailed statement.
“During a number of public hearings, nurses expressed these concerns and called on the attorney general to put the public’s needs before corporate profits. We are very pleased to see Attorney General Becerra shared our concerns and decided to deny the merger of Adventist Health and St. Joseph Health Systems and we thank him for this decision.”