Daughters of Charity, the California healthcare system on the brink of insolvency, has apparently found a financial savior: a private equity firm willing to pump hundreds of millions of dollars into the faith-based hospital operator, according to the Los Angeles Times.
New York-based BlueMountain Capital Management would put $250 million into Daughters of Charity, which operates six hospitals in the Los Angeles and San Jose areas. It would also manage the system through a separate entity called Integrity Healthcare, and have an option to purchase it outright after three years.
"The transaction represents an extremely attractive opportunity for (Daughters of Charity), allowing it to continue its operations and mission as a non-profit system with the support and backing of strong and well-qualified partner organizations," Daughters CEO Robert Issai said in a statement.
Daughters of Charity has had a rocky road in trying to find a buyer. For-profit hospital operator Prime Healthcare tried to purchase the system, but backed out last March after California Attorney General Kamala Harris attached conditions to the sale it had deemed too onerous.
And despite losing millions of dollars a month, Daughters of Charity continued to draw attention from other bidders, virtually all of them in the for-profit realm. They included Blue Wolf Capital, another private equity firm that had lost out to Prime in a prior round of bidding. BlueMountain won out over Blue Wolf primarily because the former was willing to invest money into the system, while the latter mostly wanted to cut costs and jobs among Daughters' 7,600 workforce, according to an op-ed article in the Los Angeles Times.
The deal will still need the approval of Harris' office to be finalized, according to the Los Angeles Times.