The Desert Healthcare District is scheduled to announce changes to a non-compete clause in Tenet Health’s proposed 30-year lease to operate Desert Regional Medical Center at a public meeting Thursday.
What you need to know about Desert Regional Medical Center lease negotiations
The Desert Healthcare District and Tenet Healthcare are currently negotiating a proposed new 30-year lease for Desert Regional Medical Center.
Further changes to a controversial non-compete clause in Tenet Health’s proposed 30-year lease to operate Desert Regional Medical Center are expected to be made public Thursday night by the Desert Healthcare District.
The community meeting will be held at 6 p.m. Thursday at the University of California, Riverside, Palm Desert auditorium, 75-080 Frank Sinatra Drive, Palm Desert. The district board could resolve to hold a special meeting on Aug. 6 to discuss the changes and place the lease-purchase agreement on the November ballot (the deadline to put it on the ballot is Aug. 9). If it is placed on the ballot, Coachella Valley voters would ultimately decide whether to approve the deal.
The proposed lease would be between Tenet and the hospital’s owner, the Desert Healthcare District, a public entity run by an elected board. The agreement, which includes the updated non-compete language, can be viewed at www.dhcd.org.
Tenet has “reached the conclusion of negotiations” with the school district on a lease-purchase agreement, according to a statement issued Wednesday night. Terms of the lease include selling the hospital to Tenet at the end of the lease, bringing it up to seismic standards by 2030, expanding the emergency room at JFK Memorial Hospital in Indio and paying the school district about $650 million.
Updates to non-competition clauses
A non-compete clause in the lease has been a concern among local residents in recent days, with many worried it could impede the delivery of medical services in the Coachella Valley, and the district and Tenet updated the language again ahead of the community meeting.
The new wording states:
- The District may not directly or indirectly provide financial assistance or funding for projects that support a competing business (to be specifically identified) within the District boundaries (which extend from Desert Hot Springs to the Salton Sea) or that substantially reduce the expenses or increase the revenues of another acute care hospital within the District boundaries.
- Districts may provide financial assistance or grants if the proposed project supports non-designated services (such as inpatient/outpatient psychiatric services, inpatient/outpatient pediatric services, skilled nursing facilities, urgent care, or federally qualified medical centers), but not if it would significantly reduce costs or increase revenues for another acute care hospital within their boundaries.
- Property Tax Revenue Exception: These conditions do not apply if the project is owned and operated by Riverside County and financial assistance or funding is limited to annual property tax revenues less administrative and operating expenses on a fiscal year basis.
- Districts may own and lease “real estate” (medical office buildings, urgent care clinics, etc.) located in medically underserved areas (to be designated). Districts may own real estate outside of the designated areas, but may not lease it to competing tenants or if the revenue would benefit another acute care hospital within the district’s boundaries.
Comments from local officials
“We submitted an excellent proposal and did our best to respond to community feedback,” Tenet said in a statement, noting that benefits of the lease, including seismic retrofitting and funding for the district’s grant programs, will “improve health care in the area for generations to come.”
Conversely, if it isn’t approved, “there is a devastating risk to our community,” Tenet said.
“Returning the hospital would require a minimum of $200 million in tax revenue from the District’s residents, and would require District taxpayers to cover $220 million in seismic reinforcement costs. Returning operations to the District would result in a loss of local health services,” the statement read. “In the best interest of the community, we urge the Board to support this proposal and move it forward to a referendum in November.”
Desert Regional’s main competitor, Eisenhower Health in Rancho Mirage, did not immediately respond to a request for comment.
Ema Sasic covers entertainment and wellness in the Coachella Valley. She can be reached at ema.sasic@desertsun.com or on Twitter @ema_sasic.
