SAN JOSE -- Facing a wave of residents newly insured under the federal health care law and worried that the county's medical safety net is about to be severely tattered, Santa Clara County is considering buying O'Connor Hospital in San Jose and Saint Louise Regional Hospital in Gilroy.
The two hospitals are part of the nonprofit Daughters of Charity Health System, which a few weeks ago announced it is selling all six of its California hospitals, including Seton Hospital in Daly City and Seton Coastside in Moss Beach.
The county's interest in buying one or both hospitals was confirmed Friday by this newspaper. But few details were available.
"It's hard to evaluate the deal until you know what the deal is,'' said Santa Clara County Supervisor Joe Simitian, who sits on the county's Health and Hospital Committee. "At this point, the conversation has only just begun.''
A spokeswoman for the Los Altos Hills-based Daughters of Charity, which has had a Bay Area presence since 1852, on Friday said the chain would not "speculate on any potential buyers.''
But Simitian said the health care world in the county "is going to look very different once the Daughters of Charity walks away.'' And the county, he said, has a responsibility to plan for the possibility that it may soon lose two hospitals that have provided so much free or low-cost medical care to the poor and people without health insurance.
He said the two key questions county officials must answer are: Would the public be well-served by such an acquisition, and how would a purchase affect the county's finances?
Simitian would not comment on how much the hospitals would cost. He also would not address how the county would pay for either facility or say whether the county would rely on some of the expected $500 million in revenues from a 2012 county ballot measure.
Measure A raised the county's sales tax by an eighth of a cent for 10 years to pay for health and welfare programs.
County executive Jeff Smith declined to comment other than to say "both hospitals would provide critical services to the under-served in our community."
The Daughters of Charity says it is selling the six hospitals in response to rapid changes in the health care industry resulting from the new federal health care law, cuts in Medicare reimbursement and an uncertain economy.
Under the Affordable Care Act, commonly known as Obamacare, more hospitals are expected to be sold or absorbed into larger chains to slash costs, even as they are forced to improve the quality of care.
On Friday, Bay Area hospital consultant Walter Kopp said the county's interest in buying more hospitals seemed to be going against the health care trend that is rerouting many hospital patients to less-expensive outpatient centers.
"Maybe they need the capacity -- I don't know,'' Kopp said. "And maybe there is an opportunity to create synergies.''
Any hospital purchase would have to be approved by at least three of the five county supervisors.
The county already operates the sprawling Valley Medical Center in San Jose, and some experts say it could use the two hospitals sites as a way to address the demand created by tens of thousands of county residents expected to sign up for Obamacare.
Buying one or two hospitals also would eliminate the need to spend $600 million to replace about 100 licensed beds the county expects to lose because an older VMC building that has not been seismically retrofitted.
The Daughters of Charity has said its six hospitals meet the state's seismic safety standards through 2030. But O'Connor and Saint Louise reportedly need from $10 million to $20 million of seismic work to meet those standards beyond 2030.
Paul Lorenz, CEO of Valley Medical Center, which would operate the facilities if the county bought the properties, said the purpose of considering buying the two hospitals would be to "maintain and preserve the health of the community."
"That's why we have a very strong interest in what is going on with the Daughters of Charity,'' he said.
According to state data, VMC, which is still undergoing its own expansion, has a current capacity of 574 beds. O'Connor Hospital has 358 beds, Saint Louise has just under 100.
Two other hospital chains that health care experts say would be among the most likely suitors -- HCA, which owns three hospitals in the South Bay, and Prime Healthcare Services, which lacks any Bay Area hospital presence --declined to comment Friday.
Nashville-based HCA owns Good Samaritan Hospital and Regional Medical Center, both in San Jose, and the Los Gatos Surgical Center in Los Gatos.