Daughters of Charity finally closes on a deal
Daughters of Charity Health System‘s fraught search for a buyer has ended. BlueMountain Capital Management Monday closed on a deal for the failing six-hospital system, now named Verity Health System.
The Los Altos Hills, Calif.-based Daughters of Charity finalized the sale after losing one potential buyer and failing to reach a deal with another.
BlueMountain, which will manage the hospitals through its subsidiary Integrity Healthcare, pledged up to $260 million to the failing system as part of the deal.
“This large infusion of capital will provide a great jump-start on the many strategic, operational and capital initiatives desperately needed in our hospitals,” said Robert Issai, former president and CEO of the Daughters of Charity.
The deal won conditional approval from California’s attorney general, who asked that multiple terms be met in order for the sale to close. BlueMountain agreed to maintain the system’s essential services for at least 10 years, a condition that was a deal breaker for Prime Healthcare Services, the first for-profit suitor that tried to buy Daughters. Prime called off its $843 million bid for the hospital earlier this year after the attorney general required Prime to meet 300 conditions to acquire Daughters of Charity.
The faltering system has been in search of a buyer since 2012, when Daughters of Charity entered into talks with the nation’s largest Catholic health system, Ascension Health, St. Louis. The tentative partners announced in January 2014 that talks broke off without a deal.
Another term set by the attorney general is that BlueMountain meet certain spending targets for charity care.
“Verity will proudly continue the mission of care begun by the Daughters of Charity more than 150 years ago,” Mitchell Creem, CEO of Verity Health System, said in a statement. “I am extremely pleased and grateful for the opportunity to carry on this tradition of excellence, with new leadership and significant investments.”