The potential sale comes just one year after tech billionaire Patrick Soon-Shiong, MD, acquired the nonprofit health system with a pledge to make it 'a leader in innovative healthcare delivery.'
Verity Health System said this week it may sell some or all of its six California hospitals to ease ongoing financial and operational problems.
"The top priority of Verity's board and management team is to establish a long-term, sustainable path forward for our hospitals, which are of critical importance to the communities they serve," Verity CEO Rich Adcock said in a media release.
"We are exploring a number of options to deleverage our balance sheet and address challenges our hospitals face after a decade of deferred maintenance, poor payer contracts, and increasing costs," Adcock said,
Verity's board has yet to make a final decision on a specific strategic option, but Adcock said the nonprofit health system will release information about the process when it's completed.
"As the board and management team work together to evaluate these options, the interests of our patients, employees and communities remain paramount," said Adcock, who was appointed CEO in January.
Redwood City, California-based Verity Health, formerly known as the Daughters of Charity Health System, was formed in 2015. BlueMountain Capital Management came in as a majority owner of the financially struggling health system with a pledge to contribute $260 million of capital and an option to purchase the system and convert it to for-profit after three years.
Less than two years later, however, Los Angeles tech billionaire Patrick Soon-Shiong, MD, stepped in and acquired BlueMountain's majority stake in July 2017 with a pledge to make Verity "a leader in innovative healthcare delivery, including personalized patient-centered healthcare solutions for every individual."
Last month, S&P Global Ratings revised its outlook for Verity from positive to stable.
"The outlook revision reflects an operating revenue shortfall in fiscal 2017 relative to budget expectations and ongoing operating losses through the nine-month year-to-date period ended March 31, 2018," said analyst Melanie Her.
Verity's six California hospitals are: St. Francis Medical Center in Lynwood; St. Vincent Medical Center in Los Angeles, the oldest hospital in the city; O'Connor Hospital in San Jose; St. Louise Regional Hospital in Gilroy; Seton Medical Center in Daly City; and Seton Coastside in Moss Beach.
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.