Daughters of Charity owners start search for new buyer from scratch

DALY CITY, Calif. (KTVU) -- The CEO of the Daughters of Charity Health System tells KTVU it is back to square one when it comes to finding a new buyer for the struggling non-profit.

Southern California-based Prime Healthcare was in the final stages of purchasing the hospital system, but Tuesday the deal fell through.

At Seton Medical Center in Daly City, one of the six California hospitals owned by Daughters of Charity, employees had a meeting to figure out what's next for them.

According to several employees who attended the meeting, hospital management told employees the hospitals will keep their doors open while they start the search for buyer all over again.

"Everybody seems better today," 23-year Seton Medical Center employee Nora Diaz said, in regarding morale a day after the sale fell through.

She was relieved to learn the hospitals will stay open as Daughters of Charity continue their search for a buyer.

"We're working feverishly to look at all our other options," CEO of Daughters of Charity Robert Issai said.

Issai said a dozen other potential buyers have contacted him a day after the sale to Prime fell through.

"Last time there were several buyers who were interested in buying the whole system and we've heard from them already," Issai said. "The devil is in the details. We'll see when we sit down and talk to them."

Daughters of Charity runs six hospitals in California: two in Southern California and four in the Bay Area, including Seton Medical Center.

"This place is a monument. I can't imagine this place being closed down," said Daly City resident Lenny Castillo, whose mother works as a nurse at Seton and whose family members have made various trips to the hospital over the years.

Issai said Daughters of Charity would like to sell all six hospitals as a package deal, but they're open to selling the hospitals individually as well. Filing Chapter 11 bankruptcy is also still an option.

"That's always on the table. Chapter 11 is not independent of finding a buyer," Issai said. "Change is coming, but we're doing everything possible to minimize the hurt."

"At this point, I don't know what to believe or what not to believe," Diaz said. "It's just hard to think about what's really going to happen."

No matter what happens, some sort change is inevitable. Issai said their business model of non-profit, mission-based health care doesn't work.

"Anyone who thinks we can continue as is and by magic, not lose money isn't living in the real world," he said.

"Scary. Very scary," said Castillo of the hospital's uncertain future. "I'm really worried about the employees and stuff, and the patients as well. This is a great hospital."

The last time they put the hospital system up for bid, Issai said none of the competitive offers came from groups planning to continue operating the hospital as a non-profit. Moving forward it is likely Seton Medical Center and the other hospitals in the group will become for-profit healthcare operations.

Issai said at this point, there is no deadline to find a new buyer for the hospital system. He said the hospital system is doing a little better financially now than they were last year, even though he estimates about $5 to $6 million every month in cash losses.

Even so, Issai said the hospital system is not "at a point of crisis" and can afford to keep the doors open for now, while they continue their search.