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Seton hospital sale approved: Transaction can save Daughters of Charity from bankruptcy
December 04, 2015, 05:00 AM By Bill Silverfarb Daily Journal

Kamala Harris

State Attorney General Kamala Harris has tentatively approved a transaction that will allow the sale of six Daughters of Charity hospitals, including Seton Medical Center in Daly City and Seton Coastside in Moss Beach.

Harris said it the largest and most complex hospital transaction in California history.

Under the agreement, Integrity Healthcare and certain funds managed by BlueMountain Capital Management will execute a 15-year management agreement and will pay $100 million for the option to purchase the Daughters of Charity Health System, Harris announced Thursday.

The deal also includes two other hospitals in Santa Clara County and two others in Southern California.

“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 health care services, including emergency, trauma, surgical and reproductive health services,” Harris wrote in a statement.

A union that represents 1,900 Daughters of Charity workers approves of the transaction.

“The attorney general’s approval of the Daughters of Charity sale to BlueMountain includes conditions we believe will protect the hospital system’s historic mission of serving the sick and poor in the their communities,” said Marc Quarles, a radiology technician at Saint Louise Regional Hospital in Gilroy and member of the Service Employees International Union-United Healthcare Workers West.

Harris approved the sale of the hospitals earlier this year but the potential buyer, Prime Healthcare, backed out of the $837 million deal because the conditions were too onerous.

Supervisor Adrienne Tissier, whose district encompasses Seton in Daly City, said the deal is “good news.”

The deal will bring stability to the residents in north county that rely on the medical center, she said.

“This has led to a lot of stress for a lot of people. We want to get the hospital back on track,” said Tissier, who met with the new ownership prior to Thursday’s approval of the deal.

The Daughters of Charity’s holdings will now be called Verity Health System of California.

Under the deal, BlueMountain will also provide $150 million of guaranteed financing to support the health system’s financial and capital needs and help with the $180 million capital expenditures commitment.

For at least the first three years of the agreement, the health system will continue to operate as a nonprofit public benefit corporation. After three years and before the expiration of the 15-year agreement, the funds managed by BlueMountain can exercise their option to purchase the health system.

Conditions new management must meet include that Seton Medical Center must operate as acute care hospital and offer emergency services for at least 10 years.

For 10 years, Seton Coastside must operate as a skilled nursing facility with 24-hour emergency services and a minimum of 116 licensed skilled nursing beds.

The six facilities must also provide the same types and/or levels of emergency and non-emergency services to Medi-Cal beneficiaries and maintain Medi-Cal managed care contracts at each of the facilities for at least 10 years.

Substantially all of the 7,000 jobs at the health facilities will continue, with comparable salaries, wages and job duties, according to the conditions of the deal.

“This is a historic day for north San Mateo County. It has been three long years where a community was living in uncertainty,” said Daly City Councilman David Canepa.

Seton is Daly City’s largest employer, he said.

“It is my hope that it brings closure and that the hospital remains operational. I want to thank the AG for giving certainty to the employees and patients who rely on this,” Canepa said Thursday night.

Harris’ conditions also include that all facilities must meet seismic compliance requirements until 2030.

The deal next must be approved by the pope and BlueMountain must agree to the conditions.

A full list of conditions can be found here: oag.ca.gov/sites/all/files/agweb/pdfs/charities/pdf/chs.pdf?

bill@smdailyjournal.com

(650) 344-5200 ext. 102

 

 

Tags: health, conditions, years, seton, hospital, daughters,


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