Affiliation discussions between Los Angeles-area Downey Regional Medical Center and the five-hospital Daughters of Charity Health System have ended, leaving the hospital scrambling to find an affiliation partner as it emerges from bankruptcy.
According to Downey Regional's COO Rob Fuller, DCHS leaders indicated in mid-March that they would not be moving forward on affiliation.
"We are disappointed that DCHS chose to not move forward, but we understand their priorities are with their existing system hospitals," said Fuller. "We are fortunate to have several other interested parties, and we have already reached out to them to initiate affiliation discussions."
Fuller said Downey Regional's overall plan is to affiliate with a health system in order to gain support for creditors, and emerge from bankruptcy in the early summer.
In February, DCHS began exclusive negotiations regarding the potential acquisition of DRMC, a 199-bed, not-for-profit hospital serving Southeast Los Angeles County. DRMC filed for protection under Chapter 11 of the U.S. Bankruptcy Code on September 14, 2009, citing financial systems breakdowns and poor contracts as its reasons for filing.
Fuller affirmed that DRMC has operated at normal capacity with its full range of services throughout the proceedings.
Daughters of Charity Health System president and CEO Robert Issai expressed regret for the decision, calling DRMC a "diamond-in-the-rough" and "wishing Downey Regional Medical Center success in finding a partner who will ensure its viability in this increasingly complex healthcare market."
Kenneth Strople, president and CEO of DRMC, said that under its reorganization plan, DRMC has implemented processes to shield current employees from adverse impacts of the bankruptcy to the extent possible under the circumstances.
"I want to reassure our patients, our employees, the physicians, and the community that DRMC and its services will continue to be fully open as we continue through the reorganization process," Strople said. "Payrolls will be met, and operations at the hospital will continue normally. We are confident that we will ultimately emerge as a stronger, healthier and competitive community healthcare provider."
At the beginning of reorganization, DRMC petitioned the Bankruptcy Court to allow payment of prepetition wages and benefits, and to maintain the existing benefits and policies during the case.