The following comes from a July 30 National Catholic Reporter article by Monica Clark:
The struggling Daughters of Charity Health System, which owns six hospitals in California, has accepted a proposal by BlueMountain Capital Management to provide over $250 million to “recapitalize” the hospital chain. In doing so, Daughters of Charity will transfer control of the hospitals to an independent board of directors and to Integrity Healthcare, which BlueMountain has formed to manage and operate the facilities.
Once the transaction is approved by California’s attorney general, the religious order will no longer be associated with the hospitals and the hospitals will cease to have any religious affiliation, said Elizabeth Nikels, Daughters of Charity Health System vice president of marketing and communications. The hospitals will remain open as non-profit hospitals. The current Daughters of Charity Health System board of directors will appoint the new five-member board. BlueMountain will have one representative.
In three years, BlueMountain has the option to purchase the system. If BlueMountain declines to do so, the hospitals will continue to operate as a non-profit system under its board of directors, Nikels said.
For more than a year, Daughters of Charity had been trying to sell the system which was on the verge of bankruptcy. An offer by Prime Healthcare Services to purchase the system for $843 million was withdrawn in March after Attorney General Kamala Harris imposed a requirement that Prime keep four of the hospitals as acute care facilities for 10 years.
BlueMountain has agreed to honor current collective bargaining agreements with the hospital unions and will work collaboratively with the unions, said Nikels.
As part of the transaction, Nikels added, all pension and retirement plans that are currently “church plans” will become subject to the Employee Retirement Income Security Act of 1974.
Daughters of Charity Health System expects to submit its application to the attorney general within the next week.
The Daughters of Charity opened their first hospital in California in 1858. Called Los Angeles Infirmary, it is now known as St. Vincent Medical Center. The other hospitals involved in the BlueMountain transaction are St. Francis Medical Center in Lynwood, O’Connor Hospital in San Jose, St. Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City and Seton Coastside in Moss Beach.