Daughters of Charity only has 20 days cash on hand, inks union deal
Daughters saw a $55.3 million operating loss as it looks for a new buyer after its sale to Prime Healthcare fizzles out.
O'Connor Hospital, Daughters of Charity
California’s Daughters of Charity Health System is running out of money as it looks around for potential buyers. The six-hospital system has only 20 days of cash on hand (about $80 million), down from 32 days at this time last year, according to an unaudited financial statement for the nine months ending March 31.
Last November, executives warned bondholders that loan repayment could become an issue in ongoing operations unless there’s a takeover of the health system — which so far hasn’t appeared. An $843 million bid by the nation’s youngest for-profit hospital chain, California-based Prime Healthcare Services, was scuttled over concerns over the state attorney general’s strict conditions imposed on the deal.
[Also: Prime backs out of Daughters of Charity deal]
There is “substantial doubt regarding DCHS’ ability to continue as a going concern,” the organization said in its earnings statement.
For the 9 months that ended March 3, Daughters saw a $55.3 million operating loss on $1.1 billion of revenue, compared to a $16.7 million operating surplus on the same revenue last year.
The health system’s net current portion in long-term debt as of March 31 was $285 million, down only by $5 million from that time in fiscal 2014.
The health system’s hospital discharges increased 2.8 percent over the past nine months on an adjusted basis compared to the same period last year, while total child deliveries declined by 1.2 percent and inpatient surgeries declined by 8 percent.
[Also: Daughters lays off staff; State blocks new patients to physician group]
Outpatient surgeries did increase, though, by almost 2 percent, along with emergency room visits, which were up by 9.4 percent. At the same time, net patient service revenue grew, by 16 percent to $959 million, thanks to the California’s continuing Medicaid Hospital Fee Program leveraging more federal funding.
A sign that Daughters executives may have be able to find a buyer comes from a short-term deal inked with major unions at the six hospitals, even as it reduces 300 jobs from its 7,000 employee workforce.
Daughters has extended its contract with the SEIU-United Healthcare Workers until October and its contract with the California Nurses Association until December.
“By working collaboratively with the unions, we have achieved contract extensions that will provide stability to our hospitals as we continue our sale process,” said Robert Issai, DCHS president and CEO.
“DCHS has multiple buyers interested in purchasing its hospitals,” although they cannot be named for proprietary reasons, he said. “We look forward to partnering with SEIU-UHW and CNA throughout the sale process while always keeping our mission of providing excellent patient care and service first and foremost.”
Twitter: @AnthonyBrino
