Newport Startup’s Bid to Buy L.A. Hospital Clears Hurdle
By LAURENCE DARMIENTO
The proposed sale of Santa Marta Hospital in East Los Angeles to Newport Beach’s Star Healthcare Group was given the thumbs up earlier this month in a key report to the state Attorney General’s Office.
The report found that Star Healthcare had agreed to provide adequate emergency and charity care as part of its deal to buy the hospital from Catholic nonprofit Carondolet Health System Inc.
While the report is not the final word on whether the state will approve the sale, the so-called “health effects” study provides the basis for the decision by the attorney general, which reviews hospital sales under state law.
The report, by The Camden Group of El Segundo, concluded that Star’s pledge to provide at least $2 million in charity care annually will ensure such care is not cut back.
It also said Star’s commitment to keep its emergency room open for at least five years was appropriate,and that the only other option aside from the sale of the money-losing 110-bed hospital appeared to be closure.
“It’s very positive,” said Peter Spiers, who formed Star last year with two other veteran health care executives. “We think we pass muster.”
Star was formed to acquire 100- to 300-bed nonprofit community hospitals, and then employ for-profit management techniques to turn them around. It agreed to buy Santa Marta, which has lost $20.6 million in the past five years, for $4.5 million, according to the report.
Star signed a separate management pact with Carondolet and has been operating the hospital for about two months.
Darmiento is a staff writer with the Los Angeles Business Journal.
