Daughters of Charity Health System (DCHS) announced on Monday, December 14 that it just closed a deal with BlueMountain Capital Management, putting its non-profit hospitals under the management of a hedge fund.
The announcement came 11 days after California Attorney General Kamala Harris approved the deal on Dec. 3, 2015.
"We thank Attorney General Harris for approving the transaction," said DCHS President and CEO Robert Issai. He said that the move will give a great push on the many changes that the hospital chain desperately needs.
With the deal inked, the chain of six hospitals, namely Seton Medical Center, Seton Coastside, O'Connor Hospital, Saint Louise Regional Hospital, St. Francis Medical Center and St. Vincent Medical Center are now known as Verity Health System.
The hospital will be managed specifically by Integrity Healthcare, which is a subsidiary of BlueMountain. The hospitals will remain as non-profit for up to 15 years.
Under the terms of the contract, BlueMountain is required to loan the hospital system for $160 million and stash an additional $100 million for it to have the option of buying the hospitals after three years.
Harris said a minimum of $180 million in investments must be released so that the hospitals can improve its facilities.
"Our goal is to build up the hospitals and make these hospitals vibrant health providers in the communities they serve," said Mitchell Creem, Verity's chief executive officer.
While members of the public are happy that the hospitals have been saved from totally going down, some are concerned that the Catholic organization has been left to the hands of a New York-based hedge fund.
Verity is a nonreligious sector. Hence, the existing Catholic artifacts in the hospitals were put off immediately. Aside from this change, Verity said it will continue to operate under the existing policies and not make any noticeable changes.
"Verity will proudly continue the mission of care begun by the Daughters of Charity more than 150 years ago," said Creem. He added that he is glad and thankful to have the chance of continuing the tradition of excellence under a new management.
The deal is recognized to be the biggest and most complex transaction involving a nonprofit hospital in the state's history.
Photo: Ohio Redevelopment Projects - ODSA | Flickr
