LOS ANGELES — For the second time this year, the Daughters of Charity Health System announced July 17 it plans to sell its six hospitals, including St. Francis Medical Center in Lynwood, to an investment firm.
The proposed transfer of the hospitals to BlueMountain Capital Management comes four months after Prime Healthcare, which originally planned to purchase the six hospitals, backed out of the deal in light of strict conditions placed on the sale by state Attorney General Kamala Harris.
According to the Daughters of Charity, BlueMountain will initially sink $250 million of capital into the hospital system, which will be overseen by the firm’s subsidiary, Integrity Healthcare.
“In evaluating candidates to manage the hospitals, our priority was to seek the strongest bidder who could provide the greatest long-term financial stability while honoring the obligations to our associates, physicians, retirees and other constituents,” Daughters of Charity President and CEO Robert Issai said. “The transaction represents an extremely attractive opportunity for Daughters of Charity, allowing it to continue its operations and mission as a nonprofit system with the support and backing of strong and well-qualified partner organizations.”
Like the earlier proposed sale to Prime Healthcare, the BlueMountain transaction must be reviewed and approved by Harris.
In addition to St. Francis Medical Center, the Daughters of Charity Health System includes St. Vincent Medical Center near downtown Los Angeles and four hospitals in Northern California.
According to the Daughters of Charity, BlueMountain is a New York-based, $21 billion global investment firm.
“BlueMountain is honored to have been selected by the [Daughters of Charity] board,” a statement by Blue Mountain said. “We are excited to provide substantial expertise and financial capital to [the Daughters of Charity}, positioning the hospitals to meet the evolving health care needs of the region. We look forward to working with [the Daughters of Charity] family of physicians, employees and all stakeholders to strengthen the hospitals for the betterment of these communities.”
The proposed sale to Prime Healthcare had been the subject of multiple public hearings that featured opponents claiming Prime would cut services at the nonprofit hospitals to boost the bottom line, while proponents said the hospitals faced possible closure if the deal was not approved.
When Harris approved the sale, she included a dozen conditions, including a requirement that for-profit Prime invest $150 million for capital improvements at the hospitals over the next three years, and mandating maintenance of the hospitals and emergency services for 10 years.
Prime officials initially expressed support for the conditions, but after reviewing them more thoroughly, the company announced in March it was pulling out of the deal.
St. Francis Medical Center is a level 2 trauma care facility in an area with few other options for trauma care.