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TMCNet:  Daughters of Charity Health System Leaders Say Special Interest Groups Putting Their Interests Above All Others in Proposed Sale of DCHS Hospitals

[August 18, 2014]

Daughters of Charity Health System Leaders Say Special Interest Groups Putting Their Interests Above All Others in Proposed Sale of DCHS Hospitals

LOS ALTOS HILLS, Calif. --(Business Wire)--

The proposed sale of the Daughters of Charity Health System is being unfairly criticized by the nurses' union and other special interest groups who have put their own self-interests above those of the DCHS hospitals, the president of DCHS said today.

"These unfounded criticisms are dangerous to the future health care needs of the local communities," said Robert Issai, president and CEO of DCHS. "These concerns against a potential buyer are purely in the self-interest of those voicing the criticisms."

The Board of Directors of the Daughters of Charity Health System has given its unanimous support to the ongoing evaluation of potential buyers for its troubled hospital network, endorsing a process to find a buyer that can hopefully keep the hospitals functioning.

"The public needs to understand that there is much more to the process than finding someone who can buy the hospitals for the most money," said Issai. "The board has established a strict set of standards that must be met. And we have made a point of ensuring that the process is fair and responsible for all potential buyers."

The chief operating officers of all DCHS hospitals endorsed the process, which is being led by Issai. The network of hospitals is expected to lose more than $150 million this fiscal year. A buyer must be found or the hospitals may be forced to shut down.


"The system of care embraced by DCHS in the past cannot be sustained in the current health care environment," Issai said. "Our goal is to find a buyer that meets our obligations to our associates, our retirees, our bondholders and our communities."

The unions are among a number of stakeholders who have an interest in the sale, but they are by no means alone. By choosing to criticize potential buyers for unrelated operational issues, union leaders are diverting attention from the many other pressing issues facing the board in the sale evaluation, Issai said.

"The board is clear on what needs to be considered when evaluating a buyer," Issai said. "The priorities of all the stakeholders should be in line with goals of the board of directors to find a buyer who can keep these hospitals operating without jeopardizing the pensions of current and retired employees."

Among the criteria being used to evaluate a buyer:

  • The ability to invest in capital improvements at the aging facilities
  • Whether they can meet the board's timeline of closing the sale
  • Whether they can continue to meet the health care needs of the surrounding communities
  • The satisfaction of any sale contingencies
  • The satisfactory future treatment of collective bargaining agreements
  • Their experience running hospital systems
  • Whether the buyer can avoid having to put the DCHS hospitals through potentially divisive bankruptcy proceedings
  • Their financial stability and willingness to meet what the board considers a fair price

Daughters of Charity started its health care mission in California in 1858 with the opening of the Los Angeles Infirmary, now known as St. Vincent Medical Center. Today, the health system includes a medical foundation, six hospitals, among them: O'Connor Hospital in San Jose, Saint Louise Regional Hospital in Gilroy and Seton Medical Center in Daly City, and Seton Coastside, a long-term care facility and stand-by emergency room in Moss Beach.

Last year, the Daughters of Charity hospitals cared for 172,000 emergency room visitors and provided in excess of $159 million in uncompensated care and services to people living in poverty, in addition to $22 million in traditional charity care.


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