Soon-Shiong's Verity Health System files for bankruptcy

San Jose, Calif. (KGO) -- Verity Health, the nonprofit operator of six California hospitals managed by Los Angeles billionaire, Patrick Soon-Shiong, has filed for bankruptcy while it continues to seek a buyer. Four of those facilities are here in the Bay Area, and now many are wondering how much longer they'll stay open.

"You can't help but be nervous because we went down this road once before," said Hilda Daily, a Verity Health employee.

The company operates four hospitals locally, including Seton Medical Center in Daly City, Seton Coastside in Moss Beach, O'Connor Hospital in San Jose, and St. Louise Hospital in Gilroy.

"You figure, we got bailed out, we got this billionaire and he's turning things around," said Daily.

The hospitals were originally part of the not-for-profit Daughters of Charity Health System, which was taken over by BlueMountain Capital in 2015 before Soon-Shiong acquired a majority share last year. The billionaire also owns the Los Angeles Times.

"We believe this is all a financially engineered thing to maximize value before destroying this not-for-profit safety net hospital system," says Dave Regan, President of SEIU-United Healthcare Workers West, the hospitals' labor union.

Verity Health CEO Rich Adcock released a statement, saying in part: "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, the continuing need for significant capital expenditures for seismic obligations and aging infrastructure."

Many are upset over how Soon-Shiong could walk away from the responsibility of ensuring these hospitals remain as community assets. It's a condition that was required by the Attorney General's office when the original sale was completed.

"At the end of the day, Verity is a not-for-profit, and the board has a fiduciary responsibility to monitor the management agreement, and how the monies were being spent," said Robert Issai, former Daughters of Charity Health System president and CEO.

"We had so much hope for him (Soon-Shiong) in terms of what he wanted to do to turn these into cancer centers and to really be in the forefront of innovation, and to be a leader," said San Mateo Co. supervisor David Canepa. "It's really a slap in the face."

Attorney General Xavier Becerra declined to comment.

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