California hospital CEO names 'wrinkle' in proposed Tenet sale

The CEO of Palm Springs, Calif.-based Desert Healthcare District has addressed community members' concerns — and alluded to some of his own — amid a proposed sale to Tenet Healthcare. 

Chris Christensen, the District's interim CEO, spoke out via a March 3 op-ed in The Desert Sun, less than a week after nurses launched a billboard campaign opposing the potential deal. 

In September, Dallas-based Tenet — the current operator of Desert Regional Medical Center — proposed to extend the system's lease from 2027 to 2057. Under the current proposal, Tenet would pay the District full market value for the hospital as determined by an independent appraisal, established at approximately $475 million. 

That figure includes a seismic upgrade the state has required by 2030, determined to cost about $185 million, for which Tenet would assume responsibility. The system would pay for the upgrade in installments over 15 years, totalling approximately $290 million, according to Mr. Christensen. 

In an immediate sense, the deal looks promising, solving the seismic issue and leaving the district approximately $300 million to pour into community care. But it comes with a "wrinkle," Mr. Christensen said: Tenet requires an option to buy the hospital at the end of the new lease, in 2057, for $10 million in today's dollars. 

"The board prefers a 30-year lease without the option to purchase," Mr. Christensen said. "Meanwhile, we are asking advisors to identify what it would cost to assume responsibility for hospital operations, including seismic upgrades." 

The sale of the public hospital has been controversial. On Feb. 26, the California Nurses Association and National Nurses United raised a billboard sporting the phrase, "Keep Desert a Public Hospital! NO SALE!" A second is scheduled to go up March 5. 

The unions have alleged short staffing and substandard conditions under Tenet's operation. They released two videos showing what they said was a leak in Desert Regional's neurological intensive care unit and an infestation of cockroaches in the emergency department break room.

But if the district rejects Tenet's proposal, it could find itself in a sticky situation. Tenet is not required to cooperate with the district in finding a new operator until 2026, just a year before the current lease ends. It's not enough time for a new partner to prepare to manage the hospital and initiate seismic upgrades, or for the District to hold necessary elections, Mr. Christensen said. 

Plus, if the hospital remains public, taxpayers would assume the $185 million price of seismic upgrades, and the district would miss out on $300 million to support community health. 

Any deal that the district and Tenet reach must be approved by voters, Mr. Christensen said. He urged community members to attend upcoming meetings on the issue; five are scheduled between March 5 and April 30. 

"The directors are aware that their decision will have far-reaching consequences for healthcare in the Coachella Valley, far beyond the walls of the hospital," Mr. Christensen said. 

Read the full op-ed here

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