A California hospital chain managed by Los Angeles billionaire Patrick Soon-Shiong filed for bankruptcy Friday, citing mounting losses and debt, as it seeks a new buyer.
Verity Health System, the nonprofit company that operates six hospitals in the state, said its facilities will remain open while the company restructures, the Los Angeles Times reported.
The hospitals have reportedly struggled financial for years. In 2015 the hospitals were bought out by BlueMountain Capital Management, a New York-based hedge fund, as they faced bankruptcy. Then in July 2017, Soon-Shiong’s holding company acquired a majority share of the hedge fund, the San Francisco Chronicle reported.
Soon-Shiong, a former physician who purchased the Los Angeles Times earlier this year, announced his plan to revitalize the company, which was then more than $1 billion in debt, according to its chief executive Rich Adcock. But those plans have evidently failed.
"It has become crystal clear by the bankruptcy announcement that he virtually had no intention of keeping these hospitals open and to continue to serve the poor like [the previous owners] did."
“It has become crystal clear by the bankruptcy announcement that he virtually had no intention of keeping these hospitals open and to continue to serve the poor like (the previous owners) did,” said San Mateo County Supervisor David Canepa, whose district includes the location of one of the hospitals.
Verity’s six hospitals, which serve predominantly low-income communities and employ more than 6,000 people, include four locations in the Bay Area and two in Los Angeles County.
Union and hospitals said in a news release that its facilities will remain open amid the bankruptcy proceedings, while updates to its digital health records will be put on hold, Politico reported.
David Miller, an official at SEIU-UHW, a union that represents some hospital employees, called the move to file bankruptcy a “destructive approach,” and said other paths could have been taken.
Verity secured a $185 million loan to stay afloat as it seeks potential buyers, Reuters reported. That process will be observed by a bankruptcy court and approved by regulators.
Adcock told Reuters he expects the buyout process could take years.