California county plans to buy hospital for $175 million

A California county is planning to purchase an HCA Healthcare hospital in a $175 million deal, saying it’s necessary to preserve sorely needed services.

Santa Clara County has reached a deal to buy the Regional Medical Center in San Jose from HCA Healthcare. The county will pay $175 million.

Santa Clara County has reached a deal to buy the Regional Medical Center in San Jose from HCA Healthcare. The county is looking to add the hospital to the county-owned Santa Clara Valley Healthcare, which operates three hospitals.

The county said it is looking to buy the 258-bed hospital after HCA Healthcare “downgraded the level of trauma, comprehensive stroke, and certain cardiac services at the hospital.” The county said it needed to act after HCA reduced the services earlier this month at Regional Medical Center, the only hospital in East San José.

“These service level changes at RMC are already creating a significant surge in trauma patient volume at Santa Clara Valley Medical Center, the County’s Level I trauma center,” the county said on its website. Santa Clara saw the number of patients in its trauma center rise nearly 50% in the week after Regional Medical Center scaled back its service, compared to a typical week in August, the county said.

Ultimately, the county said it was left with the choice of spending a substantial amount of money to expand the county’s three hospitals, or it could buy the Regional Medical Center. Santa Clara county opted to try and buy the facility.

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The county says it plans to restore Level II trauma services and stroke and cardiac services that were reduced. In addition, the county says it plans to eventually restore labor, delivery and newborn care services, which Regional Medical Center ceased in 2020.

County officials said they hope to complete the deal, which requires regulatory approval, in the first quarter of 2025.

Santa Clary County Executive James R. Williams said the deal would ensure the continuation of essential services to the East San José area.

“The County will not have to make significant investments to expand staffing and facilities at our other hospitals, which would otherwise be required, by building on HCA Healthcare’s facility investments and operations at Regional Medical Center,” Williams said in a statement.

At a news conference, Williams said East San José has considerable need, and is “one of the most diverse areas of Santa Clara County.” More than half of the residents around the hospital are Latino, and about one-third are Asian-American, according to the county.

“Integrating Regional Medical Center into the county's health system will not only provide benefits there and to meet that important safety net community need, but it will also help us strengthen the entire county system for the benefit of each and every resident of Santa Clara County,” he said.

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Jackie Van Blaricum, president of HCA Healthcare’s Far West Division, said the system invested more than $500 million into the region over the last 25 years.

“We are pleased this move will position Regional Medical Center to continue providing access to affordable healthcare to patients in the area,” Van Blaricum said in a statement.

At a news conference, Van Blaricum said, “We believe this is the best pass forward for our organization.”

Paul E. Lorenz, CEO of Santa Clara Healthcare, is looking forward to bringing Regional Medical Center into the system.

“For me, this decision to acquire Regional is, again, a transformative type of decision that the board has made around healthcare to ensure that, once again, people have access to healthcare irrespective of their background, financially or otherwise,” Lorenz said. “And so for me, it's a big deal. It's a really big deal.”

Santa Clara County plans to use federal money it received as reimbursement for its COVID-19 response to help pay for the hospital. The county expects to get the federal money in the next few months.

The county is also issuing bonds to help finance the purchase of Regional Medical Center, and is using the hospital as collateral. With those two sources, the county expects the purchase of the hospital won’t have any impact on the county’s budget.

More than 1,600 people work at Regional Medical Center, and the county said it is aiming to retain all the employees.

The county’s board of supervisors must approve the purchase. Santa Clara residents will have a chance to speak out and voice their views on the deal, the county said.

Sylvia Arenas, a member of the Santa Clara County board of supervisors, grew up in the area and spoke in support of the county acquiring Regional Medical Center at a news conference. She said there are a lot of people struggling in East San José.

“There's a huge smile on my face because I know that our families who are in critical care will receive the best care from our county system,” Arenas said.