Hospitals that are part of Verity Health, an El Segundo, California-based nonprofit chain owned by billionaire Patrick Soon-Shiong, remains open after the system filed for Chapter 11 bankruptcy.
In a release, health system officials said they secured debtor-in-possession financing of up to $185 million "to enable continued operations without interruption to high-quality patient care, employees and suppliers throughout the Chapter 11 process." They also released a Q&A for patients on their website.
Cain Brothers is acting as financial adviser to the company. Dentons is acting as Verity's legal counsel.
This comes after Verity officials announced in July the system was considering selling some or all of the company's six hospitals in a move to address financial and operational pressures.
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According to Verity's unaudited financial statement for the year ending June 30, Verity recorded a net loss of $118.9 million last year, equivalent to a negative net income margin of 7.5%. In comparison, the net loss for the 12-month period ending June 30, 2017, was $37.9 million, or a negative net income margin of 2.6%.
The health system reported it was down to about 15 days cash on hand on June 30.
The system was exploring multiple strategic options, said Rich Adcock, CEO of Verity Health at the time. He said the hospital was selling assets to address the hospital's balance sheet and address challenges posed by a decade of deferred maintenance, poor payer contracts and increasing costs. Soon-Shiong is best known for some of his other holdings including NantWorks, an umbrella organization for companies developing cancer therapies, genetic testing and other medical technology, as well as for his ownership stakes in the Los Angeles Lakers and the Los Angeles Times.
As Politico reported last week , Soon-Shiong took the controlling stake in the indebted six hospitals just more than a year ago and invested heavily in technology "that advanced his for-profit interests" while cutting back on charity care and investments in more basic infrastructure updates such as earthquake preparedness.
In the documents filed Friday with the California Central Bankruptcy Court, officials with Verity Health estimated the system has between 100 and 199 creditors, including nearly $150 million for the hospitals' employee pensions programs, $30 million to California's Department of Healthcare Services and nearly $15 million to Aetna Life Insurance Company.
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Other creditors include Allscripts Healthcare LLC, Premier Healthcare Solutions, the Centers for Medicare and Medicaid Services, Medtronic and Anthem Blue Cross. It reported estimated liabilities between $500 million and $1 billion.
Verity's hospitals include O'Connor Hospital, Saint Louise Regional Hospital, St. Francis Medical Center, St. Vincent Medical Center and Seton Medical Center. The filing also named Verity Medical Foundation and DePaul Ventures, as well as foundations affiliated with each hospital.
See Verity Health's latest unaudited financial statement for the 12 months ending June 30, 2018, below:
