Patrick Soon-Shiong's Verity Health hospital chain declares bankruptcy

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Los Angeles billionaire Patrick Soon-Shiong's system of nonprofit hospitals in California is declaring bankruptcy.

Dr. Patrick Soon-Shiong is a billionaire entrepreneur, philanthropist, surgeon and the new owner of the Los Angeles Times.

Many viewed Soon-Shiong as a savior when he bought a struggling chain of nonprofit hospitals in California last year -- including St. Vincent Medical Center in downtown Los Angeles and Saint Francis Medical Center in Lynwood.

On Friday, however, Verity Health and its six hospitals filed for bankruptcy.

"There's a lot of workers here and they're nervous; they can't help but be nervous," certified nursing assistant Hilda Daily told Eyewitness News.

Daily has worked at St. Vincent's for 18 years and believed Soon-Shiong, who once practiced medicine at St. Vincent, would turn the financially troubled hospitals around.

"We had this excitement going on because he's a billionaire," Daily said. "So, maybe he can help us get out of this debt, make better changes for the hospital."

Verity Health's hospitals serve the poorest and most vulnerable in its communities -- a mission of mercy first begun by an order of Catholic nuns in the 1800s. St. Vincent is Los Angeles' oldest hospital, founded in 1856 by the Daughters of Charity in a four-room adobe near what is now downtown Los Angeles.

In a statement Friday, Verity Health said it hopes a court-supervised sale can preserve the original mission of the hospitals "to the maximum extent possible" and plans to keep the hospitals open during bankruptcy proceedings with a $185 million loan.

"We can no longer swim against the tide of our operating reality which includes a legacy burden of more than a billion dollars of bond debt and unfunded pension liabilities, an inability to renegotiate burdensome contracts," Verity Health CEO Rich Adock's statement reads in part.

The hospitals' labor union casts blame on Soon-Shiong, who also is a partial owner of the Los Angeles Lakers. Was his purchase of the hospitals a temporary bailout to further his own financial interests?

"The biggest motivator to put the system into bankruptcy is to destroy the retirement plan, the pensions for between 6- and 7,000 health care workers across the state of California," said Dave Regan, President of SEIU-United Healthcare Workers.

Consumer advocacy group Health Access California is also raising questions about Soon-Shiong's motivations for the purchase and now potential sale of the hospitals.

"I can't explain why he thought he could fix things and now he finds, he's thrown up his hands and moved on," Beth Capell, a policy advocate for Health Access California, said.

Health advocates, including Capell, say Verity Health has violated terms of the California Fair Pricing Act by overcharging the poor for emergency medical care.

"The law says what it says for a very good reason, people in an emergency should not be price gouged," Capell told Eyewitness News.

Dr. Soon-Shiong -- who is credited with breakthrough treatments for cancer -- promised last year to provide "the highest level of care with the best outcomes at lowest cost for all Californians."

He spent millions of his own fortune to help pay the bills, yet critics accuse him of self-dealing, directing the hospitals to purchase IT equipment from another company he owns.

"We believe this is all a financially engineered thing to maximize value before destroying this not-for-profit safety net hospital system," Regan said.

The bankruptcy filing is raising the anxiety level in Lynwood where St. Francis Medical Center is the city's largest employer.

"Shutting down would have tremendous impact," California Assembly Speaker Anthony Rendon, whose district includes St. Francis, said. "So, we're going to go to great lengths to make sure that the hospital doesn't shut down."

Questions persist. How did Dr. Soon-Shiong, an entrepreneur and medical visionary, not see this coming?

"Dr. Shiong is an incredibly sophisticated, incredibly savvy and frankly, a ruthless business man, and that's how he became a billionaire," Regan said.

Verity Health employs more than 6,000 people across California and says the new financing will allow them to "continue to provide patient care, support employees and serve the community" while the company is restructured.

"It is very disappointing that someone who is playing such a prominent role in Los Angeles in this day and age after having made so many promises about what he would do to help save these hospitals is turning around and walking away," Capell said.
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