Downey Regional without a buyer

DOWNEY - After weeks of negotiations towards a potential purchase agreement, Presbyterian Intercommunity Hospital has chosen not to renew a letter of intent with Downey Regional Medical Center citing several financial insecurities regarding the acquisition."Our first responsibility needs to be to assure that this is a sound proposal for both organizations," said James R. West, president and CEO of Presbyterian Intercommunity. "We remain interested in making this acquisition a reality, and believe that it is important that the Downey community have access to the quality services of a not-for-profit medical center." In a released statement, West gave several reasons why Presbyterian Intercommunity chose not to extend the letter of intent, which expired on May 7. Chief among them was the unwillingness of health plans to negotiate new contracts with reimbursement rates that would allow Downey Regional to remain viable. "This is absolutely critical to the successful rehabilitation of the organization if it's to climb out of its current financial situation," said West. "If the health plans come back to the table with fair market rates, Presbyterian Intercommunity Hospital's acquisition plan could be back on track." However, West also expressed concerns over future renovations and updates that are required at the 90-year-old hospital. "Like many California hospitals, Downey Regional has seismic safety standards that must be met by 2030," said West. "These add a considerable investment to the equation, and must be taken into consideration." Downey Regional and Presbyterian Intercommunity have been in deliberate negotiations since the two hospitals signed a non-binding letter of intent last month. Since filing for bankruptcy last September, Downey Regional has approached several interested parties concerning a potential acquisition of the hospital. In February, Downey Regional Medical Center executed a letter of intent for affiliation with the Daughters of Charity Health System, but after a brief period of negotiations, the discussions ended when the health group called the potential acquisition economically unfeasible. In April, officials were hopeful that Downey Regional and Presbyterian Intercommunity could come to terms under an asset purchase agreement and that Downey Regional would emerge from bankruptcy this summer. Downey Regional has chosen not to comment further on the matter as negotiations with Presbyterian Intercommunity are still ongoing. Despite its bankruptcy, the 199-bed, non-profit hospital has continued to operate at normal capacity, providing its full range of services.

********** Published: May 21, 2010 - Volume 9 - Issue 5