KPC Health to Buy Four Verity Hospitals for $610M

Headnote

HEALTHCARE: LA's St. Francis Among Buys

KPC Healthcare Inc. was the stalking horse that won the race.

The Santa Ana-based healthcare systems operator made an initial "stalking horse" bid of $610 million for four hospitals and a nursing facility owned by an affiliate of Redwood City-based Verity Health System, a nonprofit healthcare organization that filed for bankruptcy protection last August.

The biggest prize in the Verity portfolio is Lynwood's St. Francis Medical Center, a 384-bed trauma center that KPC valued at $420 million.

When no other bids exceeded the $610 million initial bidding price, no auction was required and Verity Health System's Board of Directors approved the sale on April 15, followed two days later by a bankruptcy judge in Los Angeles. The bid still needs to be submitted to the state attorney general for final approval.

Last week's events marked "an important milestone for KPC Health's bid to acquire four Verity Health hospitals," said Kali Chaudhuri, founder and chairman of KPC Group, which is the parent company of KPC Health.

"We look forward to working with Verity Health on a successful acquisition and welcoming these important community hospitals into our integrated healthcare system."

KPC's involvement as a potential bidder in the Verity properties wasn't disclosed until last week; it had filed its bid under the name Strategic Global Management Inc., according to court documents.

Deals Expected

The pending acquisition is the latest growth move by KPC Healthcare, which has a history of turning around underperforming assets.

KPC Health's Orange County portfolio includes four hospitals-in Santa...