Verity Health System announced Jan. 6 that it plans to close St. Vincent Medical Center, a 366-bed hospital in Los Angeles.
El Segundo, Calif.-based Verity entered Chapter 11 bankruptcy in August 2018 and is seeking bankruptcy court approval to close St. Vincent Medical Center. The nonprofit health system is shutting down St. Vincent after a deal to sell four of its hospitals fell through.
Corona, Calif.-based KPC Group bid $610 million in January 2019 to acquire four hospitals from Verity, and the bankruptcy court approved the asset purchase agreement three months later. In early December, KPC's Strategic Global Management missed the court-appointed deadline to purchase the hospitals.
In December, SGM appealed the court's order setting the closing deadline. About one month later, Verity filed a lawsuit against KPC Group and its affiliates, alleging "intentional and misleading conduct" and breach of the asset purchase agreement, according to the Los Angeles Times.
The bankruptcy court will consider Verity's request to close St. Vincent later this week. The health system said arrangements have already been made to transfer patients and specialty services to nearby facilities.
"We are deeply saddened to announce the planned closure of St. Vincent Medical Center," Verity Health CEO Rich Adcock said in a news release. "This decision has not been taken lightly and comes only after exhausting every option to keep this hospital open."
In a Jan. 8 release, SGM disputed Verity's claims regarding why it's closing St. Vincent.
"Verity falsely ascribes its decision to an alleged default by Strategic Global Management, Inc. ("SGM"), an affiliate of the KPC Group of Companies, on its contract to purchase St. Vincent as well as St. Francis Medical Center, Seton Medical Center and Seton Coastside," states the release.
SGM claims it raised concerns about Verity's compliance with the purchase agreement last fall, including concerns about safety and health issues at St. Vincent.
"SGM remains interested in resolving its differences with Verity and closing the purchase transaction," an SGM spokesperson said in the Jan. 8 release. "However, Verity has refused to meet with SGM. While SGM is hopeful Verity will reconsider its position, SGM will vigorously defend itself from Verity's claims and at the appropriate time, bring its own claims against Verity for its wrongful conduct."
The closure of St. Vincent will not affect Verity's other three hospitals in California: St. Francis Medical Center in Lynwood, Seton Medical Center in Daly City, and Seton Coastside in Moss Beach.
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Editor's note: This article was updated on Jan. 24 at 6 p.m. CT to include the statement from SGM.