New York – Daughters of Charity hospital chain, a financially troubled health system based in Los Altos, California has closed a $260 million investment deal with BlueMountain Capital Management, the largest deal and the most complex nonprofit hospital transaction in the state’s history. This controversial deal represents that one of the Bay Area’s oldest hospital chains will afloat for at least three more years.
The financially troubled Daughters of Charity Health System that includes Daly City’s Seton Medical Center, Seton Coastside in Moss Beach, San Jose’s O’Connor Hospital, Gilroy’s Saint Louise Regional Hospital and two safety-net hospitals in Los Angeles announced on Monday that it has completed its deal to transfer six hospitals to the control of BlueMountain Capital and its Integrity Healthcare subsidiary after 2 years of looking for a buyer. BlueMountain will contribute up to $260 million as part of a new Verity Health System.
According to the terms of the transfer, BlueMountain will operate Verity as a nonprofit, not-religious hospital for at least three years before considering its option to purchase the system and turn it into for-profit centers. The deal requires BlueMountain to loan the hospital system up to $160 million and pay an additional $100 million for the option to purchase the six hospitals.
The deal has caused some controversies with people for and against the measure. Verity is a nonreligious entity, which unleashed Catholic artifacts in the hospitals came down immediately.
On the other hand Some patients some patients expressed concern about the Los Altos Hills-based hospital system changing hands from a Catholic-run organization to a New York City-based group of investors. Valerie Bellinger, a patient at O’Connor Hospital in San Jose said she was worried the human aspect, the compassion and the quality of human contact would get lost over concerns about the almighty dollar.
The fate of the Daughters hospitals has been a major concern for health care advocates as the chain works as a safety-net system that serves low-income patients. They are concern that the hospitals would close, leaving the poor with few options for much-needed care.
But on the other hand the deal brought relief to people who work at the hospitals. For instance, Gregg Woods who serves as a union shop steward for O’Connor say they didn’t think this was bad. And Verity program also said this is for the best.
“Our goal is to keep these hospitals operating for a very long time, and to make sure they return to their place in the community.” Mitch Creem, the CEO of Verity.
New Verity have taken control over the Daughters administration. Robert Issai, president and CEO will be leaving the organization but for the most part, the chain’s 7,000 employees will retain their jobs, along with their labor and pension agreements.