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St. Francis Medical Center
Daughters of Charity's St. Francis Medical Center is already up for sale.

Regional News/West: Daughters of Charity seeks buyers for its five hospitals, assets

By Melanie Evans
Posted: January 18, 2014 - 12:01 am ET

Daughters of Charity Health System announced it is up for sale, but the buyer won't be Ascension Health, which has been a strategic consultant to the struggling California health system for more than a year.

The Los Altos Hills, Calif.-based Daughters of Charity said it would seek one or more buyers for its five hospitals and other assets after officials mutually agreed with Ascension Health, a St. Louis-based health system with 103 hospitals, to end acquisition talks.

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Ascension Health, the nation's largest Catholic health system, and Daughters of Charity entered into an affiliation agreement in December 2012 that the Daughters of Charity described to lenders last March as “a platform to continue merger activities.”

Ascension Health did not find other deals in California that would have created desired market leverage when combined with Daughters of Charity's operations, said Robert Issai, president and CEO of Daughters of Charity. The system's operations were too scattered within California to give Daughters of Charity the scale and market clout that its officials believe is needed, he said. “It's tremendously difficult to be a small system across three markets,” he said.

St. Vincent Medical Center in Los Angeles and St. Francis Medical Center in Lynwood, Calif., are already on the market. The decision to sell quickly was made to avoid the possibility of further deterioration that would make a sale more difficult, Issai said. “You don't want to wait and see what happens,” he said. “I am paid to see the writing on the wall and what the future holds.”

Officials will seek buyers that can improve market position and access to capital for individual hospitals or the entire system, Issai said.

Follow Melanie Evans on Twitter: @MHmevans

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