A hedge fund has approved the conditions California Attorney General Kamala Harris set forth for the acquisition of six hospitals controlled by Daughters of Charity including Seton Medical Center in Daly City.
The hospitals will now be controlled by BlueMountain Capital and be rebranded Verity Health System.
The deal also includes Seton Coastside in Moss Beach, two other hospitals in Santa Clara County and two others in Southern California.
Longtime industry executive Mitchell Creem will be Verity’s chief executive officer.
“Verity will proudly continue the mission of care begun by the Daughters of Charity more than 150 years ago,” Creem wrote 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.”
The attorney general called the deal the largest and most complex hospital transaction in California history.
The Service Employees International Union-United Healthcare Workers West approves of the transaction.
Seton is Daly City’s largest employer.
“The deal ends months and years of potential uncertainty,” Daly City Councilman David Canepa said Monday. “It avoids the ultimate disaster by ensuring residents in north county have access to quality health care and by sparing hundreds of jobs.”
Under the deal, BlueMountain will 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.
Seton Medical Center is in need of a seismic retrofit that turned off some potential buyers including San Mateo County, which has subsidized operations at the facility with Measure A funds.
For at least the first three years of the agreement Harris proposed, 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, BlueMountain can exercise its option to purchase the health system.
Conditions new management must meet include that Seton Medical Center must operate as an acute care hospital and offer emergency services for at least 10 years.
“I’m so glad the hedge fund approved the terms and conditions that Harris offered,” Daly City Councilman Mike Guingona said Monday. “It’s a fair deal and it means the hospital will remain a hospital.”
It is unclear, however, whether Verity will sell off any surplus properties Daughters of Charity held.
“We’ll have to work with the new owners to see what the site will eventually look like such as what other projects or buildings will go on the site,” Canepa said.
For the next 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 six health facilities will continue, with comparable salaries, wages and job duties, according to the conditions of the deal set forth by Harris.
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