The latest deal to sell Anaheim Memorial Medical Center collapsed Thursday when state officials nixed its $57-million purchase by Pacific Health Corp., which faces allegations that it defrauded Medicare and Medi-Cal.
This was the third time in about a year that an agreement to sell the financially struggling hospital has unraveled.
Atty. Gen. Jerry Brown's office cited several factors in the decision, including "pending criminal investigations" and a civil complaint filed last week by Los Angeles City Atty. Rocky Delgadillo accusing three hospitals of recruiting homeless people for costly and unjustified treatment.
Pacific Health owns two of the three, Los Angeles Metropolitan Medical Center and Tustin Hospital and Medical Center. The third, City of Angels Medical Center in Los Angeles, has a different owner.
"We have concluded that this proposed sale is not in the public interest and will likely create a significant effect on the availability or accessibility of healthcare services to the affected community," Chief Deputy Atty. Gen. James M. Humes said in a written decision.
His office had veto power over the sale because the 223-bed Anaheim Memorial is a nonprofit hospital that was being sought by a for-profit company.
James W. Young, Pacific Health's chief executive, said he was disappointed by the decision but confident his company would be cleared of the fraud allegations.
"Our concern is now for the community," he said in a statement.
"Anaheim Memorial Medical Center is an important healthcare facility, and we hope this latest setback does not jeopardize its future."
A spokeswoman for Memorial Health Services, which has owned the hospital since 1995 and put it up for sale in 2006, said the Fountain Valley company was weighing its options, but she declined to elaborate.
In February 2007 Memorial Health announced an agreement to sell the hospital to Prime Healthcare Services Inc. of Victorville for $55 million and a commitment of $25 million in capital improvements over five years.
Brown's office quashed the sale in July 2007, saying it could not conclude that it "reflects fair market value . . . and is consistent with the public interest." Regulators also questioned the propriety of the bidding process.
Two months later, Memorial Health said it would sell Anaheim Memorial to Integrated Healthcare Holdings Inc., which owned four other hospitals in Orange County.
