Catholic hospitals find buyer, awaits review

Seton Medical Center, Brendan Bartholomew/ Special to the Examiner

After a multiyear ordeal marked by uncertainty and punctuated by what some have called betrayal, there appears to be light at the end of the tunnel for the Daughters of Charity Health System.

The Catholic organization recently announced that its family of hospitals has a buyer in the form of BlueMountain Capital, a hedge fund promising to assume responsibility for employee pensions, honor collective bargaining agreements and provide a much-needed cash infusion to keep the hospitals open.

The health system includes San Mateo County’s Seton Coastside in Moss Beach and Seton Medical Center, which is Daly City’s largest employer and a primary source of health care for thousands of Medicaid recipients. Saint Louise Regional Health Center in Gilroy and O’Connor Hospital in San Jose are also part of the system, along with two Southern California facilities.

Representatives for both BlueMountain and Daughters of Charity have been tight-lipped about many aspects of the proposed transaction. But within a few weeks, they say they will send California Attorney General Kamala Harris official notice of the proposal, at which point its details will be publicly revealed.

Once Harris receives notice of the intended sale, the clock starts on a 105-day review process during which the attorney general will hold hearings to determine whether to approve the purchase.

A similar process began last year when controversial Prime Healthcare offered to buy the system. Some union representatives and Prime employees claimed the quality of care suffered when Prime took over hospitals, but Daughters of Charity officials said their organization was hemorrhaging money and might have to declare bankruptcy or even close hospitals if the sale was not approved.

Harris granted conditional approval for the sale earlier this year, but Prime surprised stakeholders by canceling the deal in March, claiming the attorney general’s conditions were too burdensome. Those conditions included keeping the hospitals open for at least 10 years.
California Nurses Association representative Desmond Murray noted that Prime was not the first organization to back out of a deal with Daughters of Charity, which had previously been “left at the altar” by Ascension Health.

“The Daughters, the community and their patients have been jilted twice,” Murray said. “For all of their sakes, we would like to see a smooth transition.”

Seton Medical Center nurse Debra Amour said the Daughters of Charity community was shocked when Prime walked away from its approved purchase. “I totally felt betrayed,” Amour said. “We all did. It was a horrible experience to go through.”

BlueMountain plans to bring in executives who have experience fixing financially troubled hospitals, Amour noted, adding that she hopes Harris approves the sale.

Daly City Councilman David Canepa agreed, saying the county will not fund a replacement hospital if Seton closes, and such a closure would be devastating. The councilman added that anybody who opposed the sale would be irresponsible in his eyes.

“Our community can’t withstand going through another rejection,” Canepa said. “We have to make this happen.”

“Not so fast,” said Councilman Mike Guingona, who noted that he is “cautiously optimistic” about the proposal, but would not endorse it without knowing specifically what its terms are.
“Let’s exercise a little due diligence,” Guingona said. “I want to know that before this thing goes any further, we are going to ask the right questions.”

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