California’s top lawyer, Attorney General Kamala Harris, has conditionally approved BlueMountain Capital Management’s acquisition of a trouble chain of nonprofit hospitals serving the Los Angeles and San Francisco Bay areas.
Under the agreement, BlueMountain Capital would cough up $100 million for the right to acquire the six nonprofit hospitals from the Daughters of Charity Health System. Based on the terms outlined by Harris, BlueMountain, a hedge fund founded back in 2003, would find itself obligated to continue operating the hospitals as nonprofit health centers for at least three years before exercising the option to convert them into for-profit centers.
The six hospitals — San Jose’s O’Connor Hospital, Daly City’s Seton Medical Center, Lynwood’s Saint Francis Medical Center, Moss Beach’s Seton Coastside and Gilroy’s Louise Regional Hospital — generally serve what The Associated Press reported to be low-income patients.
While there have been those who have expressed concerns over the new ownership’s potential lack of inclination to continue the charitable work conducted at the hospitals, the present proposal on the table entails an overall 15-year agreement in which the new owner would be required to provide Medi-Cal patients with the same services for at at least a decade. Additionally, the continuance of charitable and essential care services would the mandatory. Subsequently, the AP reports that a major healthcare consumer organization has applauded the terms of the purchase agreement.
As mandated by law, the acquisition of nonprofit hospitals by for-profit entities must be approved by the office of the attorney general.
Douglas Hesney, spokesperson for BlueMountain Capital, was quoted by the AP as having said that the company is “optimistic the transaction will close shortly.”
