BlueMountain Capital Management agreed this week to the terms set out by California Attorney General Kamala Harris (D), clearing the way for six hospitals owned by Daughters of Charity to be sold for $100 million, along with $160 million in loans to the six hospitals for system improvements.
The sale of the California hospitals serving mostly low-income patients has been controversial. The first deal with Prime Healthcare fell through earlier this year when Prime officials balked at the “onerous” conditions put on the sale by the Attorney General’s office.
Harris on Dec. 3 outlined similar restrictions on BlueMountain for the hospitals sale. BlueMountain agreed on Monday.
Conditions of sale include keeping five of the six facilities open for 10 years, maintaining the Medi-Cal services at all sites for a decade and providing a high level of charity care.
The six hospitals sold are: St. Vincent Medical Center in Los Angeles; St. Francis Medical Center in Lynwood; O’Connor Hospital in San Jose; Saint Louise Regional Hospital in Gilroy; Seton Medical Center in Daly City and Seton Coastside in Moss Beach.
Harris also insisted that a total of $180 million be made in capital improvements, in part with the $150 million in loans.
The health system’s corporate status will be changed from a not-for-profit religious corporation to a not-for-profit public benefit corporation. The name of the health system will become Verity Health System of California.
“This is the largest and most complex nonprofit hospital transaction in California history,” Harris said in a written statement. “…The proposed transaction can protect the health system — which is currently losing millions of dollars a year — from bankruptcy.”
Denise Duncan, executive vice president of the United Nurses Associations of California/Union of Health Care Professionals, said she’s pleased and wary about the new ownership.
“We’ll continue to hold new hospital management accountable,” Duncan said in her statement. “We’re cautiously optimistic and will continue to make sure our patients are protected.”