A massive deal in California would give a hedge fund control of a charitable hospital group.
It took months, but California Attorney General Kamala Harris has granted conditional approval for the largest nonprofit hospital transaction in the history of the state.
BlueMountain Capital Management will now be allowed to invest in the Daughters of Charity Health System, representing the first time a hedge fund has been involved in a nonprofit hospital transaction in California, according to a San Jose Mercury News report.
Harris’ approval also would enable it to purchase the hospital chain after three years.
It’s not the first time a hedge fund has attempted to snap up the troubled hospital chain. Prime Healthcare Services bid $843 million last year for it, but pulled out shortly after Harris demanded certain contingencies. Harris will be requiring the same contingencies for this sale: namely that BlueMountain maintain its “charitable purpose” and ensure that “low-income Californians will continue to have access to critical health care services, including emergency, trauma, surgical, and reproductive health services,” she said in a statement.
There are six Daughters facilities in operation. BlueMountain would be required to keep at least five of them open for 10 years under the terms of teh agreement, which the hedge fund is reviewing. It would also need to maintain Medi-Cal contracts and services for a decade, and continue charity care at acceptable levels based on historical use.
Daughters has hospitals in San Jose, Gilroy, Dale City, Moss Beach, and two in Los Angeles.
Daughters of Charity Health System is a Catholic health care organization that is based in Los Altos Hills in California. It boasts 8,000 associates and physicians in its six hospitals. DCHS has been facing financial difficulties and it is estimated they are losing $10 million each month since 2014.