CORONA, Calif., Jan. 08, 2020 (GLOBE NEWSWIRE) -- Verity Health System of California (“Verity”) recently announced that it intends to close the St. Vincent Medical Center. Verity falsely ascribes its decision to an alleged default by Strategic Global Management, Inc. (“SGM”), an affiliate of the KPC Group of Companies, on its contract to purchase St. Vincent as well as St. Francis Medical Center, Seton Medical Center and Seton Coastside. SGM disputes Verity’s claim. Notwithstanding Verity’s attempt to blame SGM for the problems at St. Vincent, in Verity’s pleading to the Court for authorization to close Verity admits:
“St. Vincent has consistently lost money for many years due to, among other things, unfavorable payor contracts, rising health care costs, high pension obligations and certain requirements imposed on St. Vincent by the State of California Attorney General, as more fully described below…St. Vincent is also dramatically under invested in structural improvements necessary to meet California’s state mandated seismic and clean energy requirements…The combined effect of these issues have been a consistent drag in operating cash balances absent additional financing….
While the Debtors collectively have a poor financial history, St. Vincent has been particularly troubled…On the Petition Date, although St. Vincent accounted for approximately only 23% of the patient volume of the entire Verity Health System, the hospital accounted for approximately 60% of the operating losses…The Debtors project continuing operating losses by St. Vincent. The reported financial statements of St. Vincent reflect that, in fiscal year 2019 (ended June 30, 2019), SVMC lost approximately $65 million which was an 18% and 103% increase over the fiscal years 2018 and 2017, respectively.”
During the Fall, SGM raised additional serious concerns regarding Verity’s compliance with the purchase contract, including serious health and safety issues at St. Vincent.
“SGM remains interested in resolving its differences with Verity and closing the purchase transaction,” said an SGM spokesperson. “However, Verity has refused to meet with SGM. While SGM is hopeful Verity will reconsider its position, SGM will vigorously defend itself from Verity’s claims and at the appropriate time, bring its own claims against Verity for its wrongful conduct.”
Contact: Jeff Corless 714.676.8878 or jeff.corless@kpchealth.com