County initiates process to buy O’Connor, St. Louise hospitals
Santa Clara County officials on Tuesday took the first step toward buying a financially struggling hospital group to ease overcrowding at the county-run Santa Clara Valley Medical Center in San Jose.
But before the the county can purchase the chain — which includes O’Connor Hospital in San Jose, St. Louise Regional Hospital in Gilroy and the De Paul Health Center in Morgan Hill — it will need the Board of Supervisors’ approval of the transaction at a Nov. 6 hearing. And it will have to secure the winning bid at a December auction.
The supervisors agreed Tuesday to proceed with the acquisition and discussed delegating a commission to oversee the negotiations.
“I think there’s a lot of excitement and a lot of good energy in purchasing these hospitals and I think they will serve our county and our residents well in the future,” Supervisor Ken Yeager said.
The supervisors also discussed compensation for future employees. County Executive Jeff Smith has indicated that nurses and support staff from the hospitals would become county employees, while the doctors would work under contract. On Tuesday, he said the county intends to hire all employees working for St. Louise
and O’Connor “through a merit system process” well in advance of the transaction.
The county has offered to buy the chain as part of a bankruptcy reorganization by the hospitals’ parent company, Verity Health System of California. Verity has asked the bankruptcy court to approve an auction in December in which the county’s $235 million bid would be considered along with others that might surface.
While Verity has been in discussion with more than 100 organizations looking at various parts of the hospital system, Santa Clara County was the first to offer a bid, according to Verity Health CEO Rich Adcock.
The county’s offer is expected to set the floor for any competing offers. If none emerge, Santa Clara County’s offer would stand.