BlueMountain Capital Management hs bought up the Daughters of Charity Health System in a deal worth hundreds of millions of dollars.
The financially troubled non-profit hospital chain Daughters of Charity Health System has just been bought by a hedge fund.
Daughters of Charity accepted a $260 million investment deal with BlueMountain Capital Management, which was signed off on by California Attorney General Kamala Harris, and it marks the largest non-profit hospital transaction in the history of the state, according to a San Jose Mercury News report.
The public has reacted relatively positively to the news, as it saves the hospital chain — which consists of six hospitals — from going under. Still, many are concerned that the Catholic organization is changing hands into that of a profits-focused hedge fund, especially for a chain focused on helping the poor.
But there was no escaping the reality that the chain was losing hundreds of millions of dollars, and something had to be done.
When Harris signed off on the deal, she had several stipulations for the hedge fund, including that the hospital chain continue its mission of serving low-income patients. That reassures some who worry about the oversight of a hedge fund, which are not known for having charitable focus to say the least.
Daughters of Charity CEO Robert Issai thanked Harris for approving the deal in a statement and said that the capital will help the hospital continue its mission.
More specifically, the deal will allow BlueMountain to loan the hospital system $160 million. It also paid $100 million for the option to purchase the six hospitals in three years time.
Still, the hedge fund may at some point turn the hospital system into a profit-making enterprise after 15 years under the terms of the agreement.