St. Vincent Hospital teeters on closure after sale falls apart
The nonprofit owner of St. Vincent Medical Center near downtown Los Angeles has asked a bankruptcy court for permission to shut down the facility after a bid to sell the struggling hospital fell through.
Verity Health System, which announced the move Monday, promised an orderly transfer of patients and services, including transplants and dialysis, to nearby facilities including Good Samaritan and Providence St. Joseph’s. St. Vincent reported in its bankruptcy petition that it had 1,099 employees.
For the record:
1:48 PM, Jan. 07, 2020An earlier version of this article misstated the number of bids for the hospital chain following its bankruptcy filing. It also said that a sale agreement between Verity Health System and KPC Group included terms imposed by the attorney general to keep the facilities open. No such limits were in effect for the sale.
Verity will continue to operate St. Francis Medical Center in Lynwood, as well as Seton Medical Center and Seton Coastside in San Mateo County, which had been included in the proposed sale, the company said.
The decision to close St. Vincent “has not been taken lightly and comes only after exhausting every option to keep this hospital open,” said Rich Adcock, chief executive of Verity Health. “St. Vincent and its caregivers have had the distinct privilege of providing care to patients in this community. We appreciate both the opportunity to serve and the caregivers who have made a difference in ensuring that patients received the highest quality care. While we regret the closure of St. Vincent, we know that this community will continue to be well-served by nearby hospitals.”
Last April, a bankruptcy court approved a $610-million bid from Corona-based KPC Group to acquire the four Verity hospitals. KPC missed a closing deadline in early December, according to Verity, which has filed a lawsuit over the alleged breach, claiming “intentional and misleading conduct.”
Officials from KPC Group were not immediately available for comment. Court records show they disputed the deadline to close the deal.
The bankruptcy court will consider the motion to close the hospital later this week.
Verity took the heavily indebted hospital chain into bankruptcy in 2018. The failed KPC bid for the chain, which largely caters to low-income neighborhoods, and a prior sale agreement were closely monitored by the state attorney general’s office.
Among the creditors in the bankruptcy is the hospital system’s former management company, Integrity Healthcare, controlled by entrepreneur-physician Patrick Soon-Shiong’s Nantwork companies. Soon-Shiong also owns the Los Angeles Times.
Nantworks-related entities contributed more than $300 million in unsecured and secured loans and investments to the chain as part of Integrity’s efforts to re-capitalize and revitalize the hospitals. Verity opted to cancel that contract as part of its bankruptcy proceedings, ending Soon-Shiong’s relationship with the hospitals, according to court records.
The decline of the urban hospital system once run by the Roman Catholic Daughters of Charity has been decades in the making, as the nonprofit fell behind in funding pensions and struggled with operating deficits and an aging building in need of expensive repairs and upgrades.
In 2015, a $843-million sale to Prime Healthcare Services fell through amid bitter accusations that terms set by the state attorney general’s office, including a promise to keep the hospitals open for at least a decade, were too harsh. Shortly afterward, private equity firm BlueMountain brought a much-needed $260-million capital infusion, with a purchase option, and formed Integrity to spearhead that effort. Nantworks took over controlling interest of Integrity two years later.
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