BILL LOCKYER                                                                        
State of California

1300 J. STREET SUITE 125

P.O. Box 966255

SACRAMENTO, CA 94244-2550

Telephone: 916-324-5347

Facsimile: 916.327.2319

E-mail:Mark.Urban@doj.ca.gov

July 3,2002

William A. Barrett
Senior Vice President and
Assistant General Counsel
Tenet Healthcare Corporation
3820 State Street
Santa Barbara, California 93015

RE:       Daniel Freeman Marina Hospital

            Thank you for your June 27, 2002 letter responding to my request for information

Regarding the closure of Daniel Freeman Marina Hospital (Marina) by Tenet Healthcare Corporation and Tenet Health Systems, DFH, Inc. (collectively referred to as “Tenet”).  Based on the information that you provided, Tenet has failed and is continuing to fail to comply with Conditions IX and XV of the Attorney General’s December 7, 2001 consent to the sale of Daniel Freeman Hospitals.

            Condition IX of that consent states that “{t}he comprehensive planning process that Tenet DFH has agreed to conduct for Memorial and Daniel Freeman Marina Hospital (Marina) shall provide for solicitation of public input and shall include consultation with community based healthcare organizations and the County of Los Angeles DMS Agency.”  The “comprehensive planning process” that Tenet agreed to conduct is described in section10.5, subdivision (b), of the Asset Purchase Agreement.  Under that provision, Tenet is to engage in an “advisory planning process” that includes representation from the governing board of the hospital, medical staffs, community leaders, local elected officials, and hospital employees.  Condition IX expanded that requirement to include solicitation of public input and consultation with community-based healthcare organizations and the County of Los Angeles DMS Agency (EMS Agency).

            The materials that you provided do not show any consultation or advisory process involving the Marina governing board, community leaders, local elected officials, or hospital employees prior to the decision to close Marina. There is some indication in the materials that Tenet did consult with some of the medical staff.  Your letter describes several meetings between Tenet and the EMS Agency.  It is unclear from that description whether Tenet consulted with that agency regarding the closure of the Marina facility or merely informed them that closure of the facility was “an option.”  Contrary to the requirements of Condition IX, Tenet made no effort to solicit public input or consult with community-based healthcare organizations.  In short, Tenet made no effort to engage in the kid of collaborative process regarding the marina facility required by the Asset Purchase Agreement and one of he conditions of the Attorney General’s consent to the sale.

            Condition IX also requires that Tenet provide the Attorney General with copies of the any reports resulting from this planning process.  To date, Tenet has filed to provide the Attorney General with copies of any reports.

            Condition XV provides that if Tenet ceases to operate Marina as an acute-care hospital with 24-hour basic emergency room services. Tenet will either establish an urgent care or ambulatory care facility within two miles of the Marina site or provide a free transportation program to nearby clinics and hospitals for qualified area residents.  Your letter indicates that Tenet is currently determining which of these options it will be implementing.  One of these options must be in operation before the emergency room at Marina ceases operation.

            Condition XV also states that upon closure of the Marina facility, Tenet will establish an outreach program “to publicize the availability of nearby urgent care or ambulatory care facilities and emergency room facilities that will serve Medi-Cal and Medicare Recipients and provide charity care.”  Your letter shows that Tenet has initiated an outreach program regarding emergency room services.  However, There is no indication that this program will included information on nearby urgent care or ambulatory care facilities that will serve Medi-Cal and Medicare recipients and provide charity care.

            It is our understanding that Tenet intends to close the emergency room at Marina on July 22, 2002.  Tenet cannot close either Marina or the emergency room because it has not complied with Conditions IX and XV of the Attorney General’s consent.  If you disagree with this conclusion, please let us know in writing immediately.  If you agree with this conclusion, please provide, by close of business on Tuesday, July 9, 2002, Tenet’s plan for compliance with Conditions IX and XV.  There is insufficient time between now and July 22, 2002 to complete the comprehensive planning process called for in the condition.  Further that process might suggest to Tenet that it should change its plans regarding closure of the hospital or emergency room.

            Finally, your June 27,2002 letter requests that the letter and all attachments be kept confidential.  There is no legal or factual basis for this request.  Accordingly, the materials that you have submitted will be made available to the public on July 8, 2002.

            A copy of your response to this letter should be faxed and mailed concurrently to Deputy Attorney General Wendi Horwitz, Office of the Attorney General, 300 South Spring Street, CA 90013-1230; Fax No. 213-897-7605; and me at the above address and fax number.

Sincerely,                                                                      
(SIGNED)
MARK J. URBAN
Deputy Attorney General

For      BILL LOCKYER
Attorney General

MJU:mb