Financially troubled Los Altos, Calif.-based Daughters of Charity Health System has closed a $260 million investment deal with BlueMountain Capital Management that will keep the health system's six hospitals afloat.
The news comes less than two weeks after California Attorney General Kamala Harris conditionally approved the sale of Daughters of Charity to BlueMountain. With the deal closed, Daughters of Charity has been renamed Verity Health System.
Under the deal, BlueMountain will contribute up to $260 million of capital and sponsor Integrity, an entity owned by BlueMountain, to manage the hospitals.
The hedge fund must also provide the same types of emergency and nonemergency services to Medi-Cal beneficiaries and maintain Medi-Cal managed care contracts at each of the facilities for 10 years.
Although the health system's Catholic affiliation will end, Verity will be operated as a nonprofit for up to 15 years.
SEIU-United Healthcare Workers West strongly opposed a prior proposed transaction that involved Ontario, Calif.-based Prime Healthcare Services acquiring Daughters of Charity. However, the union has showed strong support for the BlueMountain deal.
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