Attorney General Kamala Harris on Thursday conditionally approved the sale of six Daughters of Charity Health System hospitals, including two in Southern California, to an investment firm.
The proposed transfer of the hospitals to BlueMountain Capital Management was announced in July, four months after Prime Healthcare, which originally planned to purchase DCHS, backed out of the deal in light of strict conditions placed on the sale by Harris.
Harris also placed tough a series of conditions on the proposed sale to BlueMountain that she said “will maintain the charitable purpose of the Daughters of Charity Health System, ensuring that low-income Californians will continue to have access to critical health care services, including emergency, trauma, surgical and reproductive health services.”
The Southern California hospitals in the proposed sale are St. Francis Medical Center in Lynwood and St. Vincent Medical Center near downtown Los Angeles.
DCHS officials said in July that BlueMountain will initially sink $250 million of capital into the hospital system, which will be overseen by the firm’s subsidiary, Integrity Healthcare.
“In evaluating candidates to manage the hospitals, our priority was to seek the strongest bidder who could provide the greatest long-term financial stability while honoring the obligations to our associates, physicians, retirees and other constituents,” DCHS President/CEO Robert Issai said. “The transaction represents an extremely attractive opportunity for DCHS, allowing it to continue its operations and mission as a nonprofit system with the support and backing of strong and well-qualified partner organizations. We are extremely excited by today’s announcement.”
According to DCHS, BlueMountain is a New York-based, $21 billion global investment firm.
“BlueMountain is honored to have been selected by the DCHS board,” according to a statement from the firm. “We are excited to provide substantial expertise and financial capital to DCHS, positioning the hospitals to meet the evolving health care needs of the region. We look forward to working with the DCHS family of physicians, employees and all stakeholders to strengthen the hospitals for the betterment of these communities.”
The aborted sale to Prime Healthcare had been the subject of multiple public hearings that featured opponents claiming Prime would cut services at the nonprofit hospitals to boost the bottom line, while proponents said the hospitals faced possible closure if the deal was not approved.
When Harris approved the sale, she included a dozen conditions, including a requirement that for-profit Prime invest $150 million for capital improvements at the hospitals over the next three years, and mandating maintenance of the hospitals and emergency services for 10 years.
Prime officials initially expressed support for the conditions, but after reviewing them more thoroughly, the company announced in March it was pulling out of the deal.
Harris’ conditions for the sale to BlueMountain include a requirement to invest $180 million in capital improvements at the hospitals, provision of charity care for needy patients and a requirement that there be “no restriction or limitation on providing or making reproductive health care services available.”
She is also requiring that “substantially all” of the 7,000 jobs at the facilities be maintained with comparable salaries and job duties.
— City News Service