Blue Wolf Capital is again interested in Daughters of Charity hospitals after failed deal with Prime
One day after the sale of Daughters of Charity Hospital System fell through, an old suitor has resurfaced.
New York-based venture capital firm Blue Wolf Capital Partners was one of the early bidders for the six-hospitals - including St. Vincent and St. Francis in Los Angeles - but it lost out to Prime Healthcare. Now that Prime has backed out of the deal, Blue Wolf is back.
"We remain strongly interested in playing any constructive role that utilizes our investment capital and health care and restructuring expertise to resolve the challenges facing the System," the firm said in a statement Wednesday.
Daughters of Charity President and CEO Robert Issai said he is welcoming bidders - the more, the better. Daughters - which is deeply in debt - has a few months to find a new buyer because of contingency plans put in place before the last negotiation fell apart, Issai said.
Blue Wolf and Daughters are well acquainted from the last bidding process.
In October Issai wrote an op-ed for the San Jose Mercury News defending Prime as the best buyer of the hospital chain and dismissing Blue Wolf. In that essay he wrote that Blue Wolf has "zero experience operating hospitals" and that it proposed a management contract and not a straight purchase.
In response Blue Wolf Managing Partner Adam Blumenthal wrote a letter to the Mercury News in defense of the venture capital firm saying its healthcare team is led by experienced healthcare executives and outlining its commitment to buying the chain as well as to protecting pensions, paying third party vendors and investing in new capital expenditures.
Blue Wolf was favored by SEIU-United Health Workers West, which worked aggressively against the deal with Prime. The union believed Prime would cut critical services if it purchased the nonprofit hospitals.
Ontario-based Prime said it rejected the deal because of "onerous and unprecedented conditions" placed on the sale by California Attorney General Kamala Harris.
Harris reviewed the deal and last month approved the sale with a number of conditions - most notably that Prime keep acute care services open for 10 years. The company had offered to maintain acute care services for five years. Under state law the attorney general must review sales of nonprofit health care facilities.
Harris accused Prime of flip-flopping on the 10-year condition after it rejected the deal.
Daughters of Charity's Issai wrote in an email to staff that "we remain committed to finding the next best solution for our patients, communities we serve, physicians, employees, retirees and creditors. Time is of the essence as we navigate the challenging operational and financial obstacles."