El Camino Hospital seeks to buy local clinics

Credit: El Camino Hospital

A subsidiary of El Camino Hospital has a purchase agreement with Verity Medical Foundation to buy five healthcare clinics in Santa Clara County, including clinics in Morgan Hill and Gilroy.

The Feb. 27 offer by Silicon Valley Medical Development of Mountain View is awaiting approval by the U.S. Bankruptcy Court in Los Angeles, the same court that approved the purchase of O’Connor and St. Louise Hospital by Santa Clara County.

Employees at the clinics last month were told by Verity Medical Foundation, which is part of the Chapter 11 bankruptcy proceeding of Verity Health System, that seven clinics owned by Verity would close March 31 unless they were sold.

The prospective owners are hopeful Verity will keep the clinics open until the sale is approved, ensuring an ownership transfer that doesn’t affect healthcare services.

“Silicon Valley Medical Development seeks to minimize any gap in service, but it is too soon to know timing of any new clinics, as much of this process is dependent upon the bankruptcy proceedings,” a spokesman for the El Camino subsidiary said in a statement to this newspaper.

If the El Camino offer is accepted by the bankruptcy court, the anticipated closing date for the transaction is April 1.

The five clinics included in the purchase agreement are: Morgan Hill Medical Associates and Pediatrics, 18550 DePaul Dr., Morgan Hill, near the county-owned De Paul Health Center; Gilroy Primary Care, 9360 No Name Uno, Gilroy, next to county-owned St. Louise Regional Hospital; McKee Clinic, 227 N. Jackson, San Jose, near Regional Medical Center; Willow Glen Clinic and Urgent Care, 625 Lincoln Ave., San Jose; and Good Samaritan Clinic, 2585 Samaritan Dr., San Jose, in west San Jose near Good Samaritan Hospital and Los Gatos.

Two other Verity-owned clinics in San Jose—O’Connor General Surgery and O’Connor Primary Care—were not included in the pending purchase agreement, and could close this month. Attempts to reach these clinics this week were not successful.

If the Silicon Valley Medical Development purchase offer is accepted by the bankruptcy court, the new owner would have a professional services agreement with the San Jose Medical Group and the providers in Morgan Hill, both pediatrics and adult primary care, according to an El Camino spokesperson. The pediatrician would continue to practice in the same building, but in a different office suite.

Verity Health System, currently in chapter 11 bankruptcy proceedings along with Verity Medical Foundation, has indicated its intention is to close the clinics if the court doesn’t approve the purchase.

Under the proposed asset purchase agreement, Silicon Valley Medical Development would acquire equipment and furnishings inside those clinics, and assume responsibility for maintaining electronic medical records, according to an El Camino spokesperson. If the court approves the proposed agreement, the prospective owners said they would plan to open new clinics to service communities.

“We currently operate several local clinics and can provide continuity of care and service to these patients,” said Bruce Harrison, president of Silicon Valley Medical Development.

According to Harrison, if the offer is approved by the bankruptcy court, his group would lease the five clinic locations and enter into a professional services agreement with San Jose Medical Group physicians.

“Our organization and its dedicated physicians have been providing care to patients of these clinics for over 60 years, and we are like family,” said Dr. Shabnam Husain, internist and chairman of San Jose Medical Group JMG. “We are optimistic and hopeful that SVMD can obtain the assets to open new clinics in a timely manner, providing a new home for our physicians to care for our patients in these communities.”

Harrison added, “We believe this would be a positive solution to a difficult situation and best serve our community’s healthcare needs. These are dedicated physicians with loyal patients in need of a new operating partner that shares their mission and vision to provide the best care possible. SVMD, in partnership with these physicians, can well fulfill that role.”

SVMD currently owns and operates medical clinic sites in Mountain View, San Jose, Los Gatos and Cupertino.

“We have worked hard to prepare a fair bid and lay the groundwork for necessary partnerships to quickly provide continuity of care. As Verity clinics close, we believe our plans would provide for a positive outcome for these physicians, their patients and our community as whole,” said Harrison.

El Camino Hospital Board Chair Lanhee J. Chen, said in a statement, “El Camino Hospital is committed to continuing to provide the best care for patients in the community. Like many hospitals across the country, we are collaborating with partners and affiliates to provide access to healthcare services in non-acute clinical settings. This strategic focus fits with the challenges and opportunities in health care today, including an aging population, competition for physicians and an evolving payment structure driven by quality outcomes for patients.

“We are hopeful that the SVMD bid is accepted through the bankruptcy proceedings, and its plans can be implemented.”

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