Desert Healthcare District board concerned over pace of Palm Springs hospital lease, sale talks with Tenet

Negotiations continue between the nonprofit that owns Desert Regional Medical Center in Palm Springs and the for-profit company that wants to buy it, leaving some board members concerned about the pace of talks.

During a special meeting Monday evening, the Desert Healthcare District board learned more about recent developments in the district’s negotiation with Tenet Healthcare. They voted on two measures that will keep their options open moving forward.

Tenet, a national for-profit company based in Dallas, has leased Desert Regional from Desert Healthcare District, a public entity whose board of directors is elected by voters, since 1997. 

That lease expires in 2027, and Tenet has proposed a new lease that would allow the company to eventually purchase the hospital. 

With state-mandated seismic refurbishments required by 2030, at an estimated cost of $222 million, district officials are trying to find solutions to avoid taxpayers footing the bill.

Last month, the district sent a strongly worded letter to Tenet noting the need for more progress in formal discussions. Tenet responded to the letter more than a week later, and the public learned what was in that response for the first time on Monday.

Steve Hollis, a district consultant, described Tenet’s response, highlighting the positives and pointing out areas that still need to be ironed out.

He said Tenet continues to refuse to hand over data and that the district needs to explore other purchasing options. Tenet is still citing issues with confidentiality and liability, even though the company is required to share the data in May 2026.

In a change from Tenet’s original proposal in September, the company is now offering to reduce the lease payment schedule from 30 years to 15 and to increase the first payment installment from $75 million to $100 million.

Hollis noted that the increase does not indicate an actual increase in payment, just an acceleration of payment.

Tenet is still proposing to purchase the hospital at the end of the lease, while the district is proposing a straightforward lease. 

The two sides are also at odds over the fair market value, with Tenet’s request being about $45 million lower than the district’s.

The district is still not pleased with the company’s lack of specificity in its planned investments throughout the valley.

Hollis said the most recent letter outlined Tenet’s commitment to a $60 million project at John F. Kennedy Memorial Hospital in Indio that would expand admitting and the emergency department.

Board members were unsatisfied with the answer and wanted more details, “[Boardmembers] are asking for at least a statement of vision of what life under Tenet for the next 30 years might mean for the broader community,” Hollis said.

Hollis said significant questions still need to be answered, including whether the seismic refurbishment will be considered a public project. With lawyers still researching the issue, whatever the answer is could majorly impact the negotiations.

Director Les Zendle said with the negotiations continuing for the next several months, he wonders if the hospital can reasonably commit to finishing the retrofit by the state-mandated deadline. 

“To finish the seismic work by 2030 really means that we should’ve started yesterday,” said Zendle.

Board members voted on two separate issues during the meeting. First, they voted to conduct public polling to gauge the community’s opinion on the purchase option. To keep their options open, they also voted to hire a consultant to research the implications and cost of the district taking over the hospital’s operation in the event negotiations with Tenet fall through. 

Zendle said he was concerned about the disruption that a change in management would cause. 

“We have to think about the doctors, nurses, other employees, and the public and how they’re going to get their care,” he said. 

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