California company finalizes agreement to buy two KC-area hospitals

The operator of two local Catholic hospitals has finalized their sale to a for-profit company based in Ontario, Calif.

Ascension, the nation’s largest Catholic health system, said in a statement Tuesday that it had reached a definitive agreement to sell St. Joseph Medical Center in Kansas City, Mo., and St. Mary’s Medical Center in Blue Springs to Prime Healthcare Services. The two hospitals operate through Kansas City-based Carondelet Health.

Terms of the deal, which was first announced in July, were not disclosed, and the deal remains subject to regulatory approval.

The three Carondelet Health long-term care facilities – Carondelet Manor, Villa Saint Joseph and St. Mary’s Manor – and the two hospitals’ charitable foundations will remain part of Ascension, according to the release.

Prime operates 29 hospitals with 4,700 beds in nine states.

The agreement comes just days after Prime agreed to buy six California-based hospitals from the Daughters of Charity Health System, a financially troubled Catholic health care system. Prime has agreed to make $150 million in capital improvements to the hospitals over the next several years. The purchase is subject to approval by the Vatican.

Prime, an active buyer of troubled hospitals, last year bought Providence Medical Center in Kansas City, Kan., and Saint John Hospital in Leavenworth, Kan., from Sisters of Charity of Leavenworth Health System, another Catholic health system.

The purchase triggered at least two lawsuits.

In July, Sisters of Charity sued Prime in federal court alleging the company withheld payments that were supposedly due it as part of the transition of the hospitals’ operations to Prime.

Prime has denied the allegations, and a federal judge this summer sent the case to state court in Leavenworth County.

Prime is also facing a court battle with former employees of Providence and Saint John who allege the company did not provide promised severance benefits. The company has denied those allegations as well.

Elsewhere, the company faces a whistleblower suit in California alleging it defrauded Medicare. Prime has insisted its billings are proper and termed the allegations “speculative nonsense.”

According to media reports, the company’s problems in California have also prompted New Jersey authorities to require several safeguards before approving the sale of a Catholic hospital in Passaic to Prime.