Seton Medical Center in Daly City and Seton Coastside in Moss Beach were part of a bankruptcy bid to acquire four hospitals operated by Verity Health System and other assets for $610 million by the KPC Group, it was announced Friday.
Nonprofit Verity Health System of California, Inc. filed a motion in the U.S. Bankruptcy Court in Los Angeles seeking bankruptcy court approval to initiate a sale process of Verity Health's remaining four hospitals. Those hospitals include the two Seton facilities in San Mateo County, and St. Francis and St. Vincent Medical Centers in Southern California, according to a press release.
The process is being led by an asset purchase agreement with The KPC Group, where the $610 million offer serves as an initial "stalking horse bid" to acquire the facilities. Stalking horse bids are typically used by those in bankruptcy to avoid receiving low bids.
Verity Health requested court approval of an orderly sale process where other potential buyers may submit qualified competing bids against the stalking horse bid. The winning bid, as selected by the Verity Health Board of Directors, in consultation with its professional legal and financial advisors, is subject to the approval of the bankruptcy court, and, depending on the buyer, the California attorney general, according to the release.
"This is news to celebrate because just a few short months ago we were told there was no interested buyer with intentions to keep the hospital open," said San Mateo County Supervisor David Canepa, who represents Daly City's District 5. "Now we have a bidder with a proven track record in California with a history of operating and revitalizing multiple hospitals."
Canepa said he is relieved for the patients who rely on Seton for quality health care and is optimistic the new buyer will respect the conditions set by the state Attorney General's Office that mandate Seton remain a full-service hospital with emergency services until 2025.
Rich Adcock, CEO of Verity Health, said in the press release that the goal when it began the process was to ensure these important historic institutions continue to provide the high level of care local communities need and deserve.
"We have reached an exciting milestone as we get closer to this goal becoming a reality," Adcock said in the press release. "Verity has remained committed to finding the right partner to provide uninterrupted service and operations for all employees, physicians and patients, and we will continue that commitment as this process advances."
In the release announcing the bid, the KPC Group said it is focused on enhancing the health and welfare of communities, and looks forward to serving patients in Los Angeles and San Mateo counties.
Verity Health filed for Chapter 11 protection on Aug. 31. On Dec. 27, Santa Clara County's bid to acquire two of Verity Health's other hospitals, including O'Connor Hospital in San Jose and Saint Louise Regional Hospital in Gilroy, was approved by the U.S. Bankruptcy Court in Los Angeles.
In addition to an emergency room serving some 28,000 patients a year, Seton Medical Center offers more than 350 licensed beds and serves some 1.5 million residents in San Francisco and San Mateo counties with a range of medical, surgical and emergency services, according to a Daly City staff report. The Daly City facility is facing a seismic upgrade estimated to cost some $250 million and has been logging considerable losses for years.