A deal for new management at the Daughters of Charity Health System has been approved by California Attorney General Kamala Harris, following the collapse of another potential deal for the hospital earlier this year.
The decision will allow BlueMountain Capital Management to operate the hospitals, of which there are six and also gain the right to purchase the chain. To purchase it, however, the investment firm will have to agree to conditions such as maintaining the historic level of charity care provided by the hospitals, which specialize in caring for the poor.
Under the new agreement, BlueMountain Capital will be signing a 15-year management agreement, and will keep the health system non-profit for at least the next three years. After those three years, however, it could purchase the chain.
The deal will also provide $150 million of financing to support the needs of the struggling hospitals, along with $180 million that is needed for capital improvements. Last but not least, the investment firm will pay $100 million for the right to purchase the chain.
"This approval includes strong conditions that will maintain the charitable purpose of the Daughters of Charity Health System, ensuring that low-income Californians will continue to have access to critical healthcare services, including emergency, trauma, surgical, and reproductive health services," said Harris in a statement.
A number of other restrictions were put on the deal, including that four of the hospitals in the network will have to remain as medical care centers with emergency services for the next 10 years.
Daughters of Charity has been struggling financially quite a bit of late, having lost $150 million a year. Because of this, it has been scrambling for a buyer since a deal with a Southern California hospital chain fell through earlier this year.
Under the new deal, Daughters of Charity will be renamed to Verity Health System.
