According to reports, a non-profit hospital Daughters of Charity Health System finalized a $260 million investment deal on Monday with an East Coast hedge fund BlueMountain Capital Management.
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Under the terms of the transfer, BlueMountain will operate Verity as a nonprofit, not-religious hospital for at least three years before exercising its option to purchase the system and turn it into for-profit centers.
New York-based BlueMountain will be sponsoring Integrity Healthcare LLC to manage the six hospitals that comprise Verity Health System fka Daughters of Charity.
NY based BlueMountain Capital Management hedge fund will be managing the operations at Daughters of Charity hospital system, one of the oldest in Bay Area, California. 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.
“Verity will proudly continue the mission of care begun by the Daughters of Charity more than 150 years ago”, Verity Health System Chief Executive Mitchell Creem said. The hospital chain made an announcement to this effect on Monday, December 14 and consequently, the hospitals under the management of the non-profit would now come under the management of the hedge fund. And given its status as a nonprofit that caters to poor and uninsured individuals, many felt that a possible takeover from a NY hedge fund was a rather odd move.
Daughters of Charity is a non-profit hospitals system dedicated to low-income patients, relying mostly on Medi-Cal – a type of insurance funded by the government, seldom accepted by healthcare providers given its low and late reimbursement rates. This clause scared away a number of potential investors before BlueMountain Capital Management finally stepped in.
Although members of public are happy over r the hospital having been saved from shutting down permanently, some are still concerned that the Catholic organization would now be in the hands of a hedge fund based in NY.
In a prepared statement, Daughters of Charity CEO Robert Issai thanked Harris for approving the deal and said the large infusion of capital will preserve the system’s mission of care, and protect labor agreements and pensions for current and former employees. The deal stipulates that they will need to keep at least five of the six hospitals open, maintaining Medi-Cal contracts and services for at least ten years.
$180 million must be invested in capital improvement expenditures at the facilities.
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Substantially all of the 7,000 jobs at the health facilities will continue, with comparable salaries, wages, and job duties. “Turning Daughters hospitals around is going to take a ton of effort”.
