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Attorney General approves merger between Rady Children's Hospital & Children's Healthcare of California

LEGAL NEWSLINE

Monday, November 25, 2024

Attorney General approves merger between Rady Children's Hospital & Children's Healthcare of California

State AG
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Attorney General Rob Bonta | Official website

California Attorney General Rob Bonta has conditionally approved the merger of Rady Children’s Hospital and Health Center with Children’s HealthCare of California. This affiliation includes their subsidiaries, Children's Hospital of Orange County (CHOC) and CHOC at Mission, to form a new entity called Rady Children’s Health. The approval is in line with California law, which requires the state Attorney General's consent for transactions involving nonprofit hospitals.

"Our children deserve access to affordable specialized medical services that support their health and well-being," stated Attorney General Bonta. He emphasized that these conditions are meant to ensure families in Southern California have continued access to quality pediatric care while maintaining healthy competition among healthcare providers.

The merger aims to benefit children across several counties including Orange, San Diego, Riverside, Imperial, San Bernardino, and parts of Los Angeles by providing high-quality care tailored to specific medical needs. The conditions imposed by the Attorney General were based on analyses conducted by independent experts as well as investigations carried out by his office.

Rady Children’s Health is required to maintain its current services for a decade, ensuring continued care for Medi-Cal patients and sustaining acute hospital services in both Orange County and San Diego County. Additionally, it must keep open medical staff privileges without restricting contracts with payors or other providers for ten years.

The conditions also focus on preserving labor rights and continuity of care within local communities. To prevent anti-competitive practices and control price increases within the pediatric specialty care market, Rady Children’s Health is prohibited from certain pricing strategies for at least ten years and must limit contract renewal price hikes to 4.8% over seven years. Compliance will be monitored independently through an appointed monitor by the Attorney General.

Moreover, Rady Children’s Health must continue offering charity care consistent with recent averages for each hospital and screen all patients for financial need regardless of insurance status.

The Healthcare Rights and Access Section (HRA) under the California Department of Justice plays a crucial role in overseeing such transactions to ensure affordability, accessibility, and quality in healthcare throughout the state.

A copy of the conditional approval letter can be accessed online.

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