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The California Department of Justice today denied a proposed partnership between Adventist Health System/West and St. Joseph Health System citing “concerns that it is not in the public interest, has the potential to increase health costs and potentially limits access and availability of health care services,” according to a release.

In June, Adventist Health System/West and St. Joseph Health System proposed creating the ST Network to operate 10 hospitals in a region stretching from Humboldt down to the North Bay area, including Lake, Mendocino, Napa, Solano and Sonoma counties.

While the hospital systems said the merger would improve care in the covered areas, the state DOJ — which has supervision in California over all charitable organizations — found differently.

“The California Department of Justice is responsible for ensuring that any proposed sale or transfer of a nonprofit health facility protects the health and safety interests of the surrounding community. After careful review we found this proposal falls short of protecting consumers,” said Sean McCluskie, chief deputy to the Attorney General.

Read the full California Department of Justice release below:

The California Department of Justice (CA DOJ) today issued a letter denying the proposed partnership between Adventist Health System/West and St. Joseph Health System. The parties submitted notices to the CA DOJ that requested approval to form a joint operating company to manage and have authority over each health system’s facilities in Humboldt, Lake, Mendocino, Napa, Solano, and Sonoma Counties.

After considering California law and regulations, as well as feedback from the public, today the CA DOJ denied the transaction due to concerns that it is not in the public interest, has the potential to increase health costs, and potentially limits access and availability of health care services.

“The California Department of Justice is responsible for ensuring that any proposed sale or transfer of a non-profit health facility protects the health and safety interests of the surrounding community. After careful review we found this proposal falls short of protecting consumers,” said Sean McCluskie, Chief Deputy to the Attorney General.

The California Department of Justice is responsible for the general supervision of all charitable organizations in the state. On June 7, 2018, Adventist Health System/West and St. Joseph Health System submitted a proposed request to create the ST Network. In the proposal, the ST Network would serve to operate Queen of the Valley Medical Center, Redwood Memorial Hospital, Santa Rosa Memorial Hospital, St. Joseph Hospital-Eureka, Petaluma Valley Hospital, Adventist Health Clearlake Hospital, Adventist Health St. Helena, Adventist Health Ukiah Valley, Adventist Health Howard Memorial, and St. Helena Hospital. The proposal claimed that the merger of the two systems would help improve access to quality healthcare throughout the Northern California region, with an emphasis on vulnerable and underserved populations.

A copy of the letter can be found here.