Daughters of Charity narrows sale timeline

Daughters of Charity Health System, a stressed multihospital system in Los Altos, Hills, Calif., said Thursday it will start reviewing final bids from seven potential buyers on Sept. 12.

System officials would not say which systems were in the running due to confidentiality agreements. They plan to make a final decision this fall.

The Service Employees International Union-Healthcare Workers West has identified Prime Healthcare Services as one of the potential buyers, but Daughters of Charity has neither confirmed nor denied Prime's role in the process. The SEIU is attempting to marshal support to prevent Prime from taking over Daughters of Charity, which has lost $167.3 million on operations over the past three years. But Prime, a for-profit chain based in Ontario, Calif., has sued the union, arguing the campaign is nothing more than a front to unionize Prime's workforce.

Ascension Health, St. Louis, had considered acquiring Daughters of Charity, but negotiations broke down this year due to the safety net system’s lack of market power.

Officials at Daughters of Charity, which is sponsored by the Daughters of Charity of St. Vincent de Paul: Province of the West, said they are evaluating prospective buyers based on whether they can invest enough money to update its facilities and can avoid putting the system’s six hospitals through bankruptcy. The offer price, treatment of collective bargaining agreements and ability to close quickly on a sale also were cited as determining factors.

Daughters of Charity, which primarily treats low-income patients, went on the market earlier this year because of its financial problems. Standard & Poor’s downgraded the Roman Catholic health system’s credit rating by six levels in April due to its dwindling cash flow and large losses.

“We regret that we are no longer capable of sustaining our network, but we are committed to finding a buyer who can meet our obligations to our associates, employees, bondholders and communities,” Robert Issai, CEO of Daughters of Charity, said in a release.

California Attorney General Kamala Harris and the Vatican will have to approve any final sale.

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