Judge lets Santa Clara County buy two struggling hospitals

O'Connor Hospital in San Jose is one of two hospitals Santa Clara County is buying.

Santa Clara County will be able to move forward with its purchase of two hospitals after a judge on Friday (Feb. 22) dismissed the state attorney general’s second attempt to block the sale.

Verity Health System, the previous owner of O’Connor Hospital in San Jose and St. Louise Regional Hospital in Gilroy, declared bankruptcy on Aug. 31, 2018.

A U.S. bankruptcy court approved the county’s $235 million bid to purchase both hospitals, and dismissed an attempt by Attorney General Xavier Becerra to block the sale.

Becerra’s office argued the county was not agreeing to keep up the same standards required of Verity when it purchased the hospitals from the Los Altos-based Daughters of Charity Health System in 2015.

County officials said they would ensure general acute care and 24-hour emergency facilities, in addition to several other agreed-upon conditions, but said it could not function the same way as a private entity.

The county already owns Santa Clara Valley Medical Center, a 741-bed hospital, at 751 S. Bascom Ave.

U.S. District Judge R. Gary Klausner ultimately ruled that Becerra does not have authority over a sale to a public entity.

With Klausner’s decision, the county will close the transaction by Thursday (Feb. 28) and take possession of the hospitals the next day, on March 1.

Combined, the hospitals will provide 451 beds, 1,700 doctors and staff.

“Losing Saint Louise Hospital simply was not an option for me and for the 100,000 Gilroy and Morgan Hill residents who would have lost their local hospital,” county Supervisor Mike Wasserman said in a news release. “I am grateful to the many people who joined our fight!”

County Counsel James Williams said he was pleased the district court denied the attorney general’s stay order, and allowed the hospital purchase to be successfully completed.

“The county has and will continue to serve as a model for local governments nationwide in protecting the health and well-being of our residents,” he said in a statement.
— Bay City News