New York-based hedge fund BlueMountain Capital Management is the prime suitor for Jewish Hospital, Insider Louisville has learned.
Jewish, a 462-bed hospital in downtown Louisville, is part of KentuckyOne Health and has been for sale since May.
A hedge fund is the primary suitor, a source told Insider, speaking on the condition of anonymity. A second source, who also asked to remain anonymous, said that suitor is BlueMountain.
KentuckyOne Health told Insider via email Wednesday that, along with its parent company, Denver-based Catholic Health Initiatives, it has “narrowed the list of potential owners … and will soon enter the next phase of discussions and exclusive negotiations.”
It declined to provide information about the potential buyers, saying that “all parties remain under a confidentiality agreement.”
In May, CHI cited “significant challenges” in the health care industry as it put the hospital and other Louisville facilities up for sale.
KentuckyOne spokesman David McArthur on Wednesday told Insider, via email, that the health system and and its parent “recently conducted meetings and in-depth discussions with several organizations who are interested in owning and operating the divesting operations. During these meetings, each organization provided their plans and vision for these facilities and providers. Since our top priority is to ensure a strong future for all of the facilities in order to best serve their communities, we are pleased with the level of interest and proposed strategy provided by the interested organizations.”
BlueMountain could not be immediately reached Thursday.
The hedge fund in 2015 took over management of California-based Daughters of Charity Health System, a struggling nonprofit Catholic hospital system. According to The Los Angeles Times, the management deal was approved by California Attorney General Kamala Harris, who required BlueMountain to agree to certain conditions, including keeping the system nonprofit for at least three years and “maintaining the historic level of charity care.”
The Times said that Daughters of Charity was losing $10 million a month and that BlueMountain stepped in to manage the system after an $843 million deal involving Ontario-based Prime Healthcare Services fell apart “because of ‘impossible’ conditions imposed by Harris.
Jewish and other KentuckyOne facilities have been plagued by financial struggles that were exacerbated by the system’s separation from the University of Louisville Hospital, which had financially propped up KentuckyOne’s other facilities.
KentuckyOne Health was created by the merger of the former Jewish Hospital & St. Mary’s HealthCare and Saint Joseph Health System. Almost since its inception, the nonprofit health system struggled financially, racking up losses of more than $360 million in fiscal years 2011 to 2015, according to IRS records.
CHI said this month that it had signed a definitive agreement to merge with San Francisco-based Dignity Health. The two nonprofit health systems had said in October of last year that they were exploring a union because health care was “at a turning point in our nation.”
BlueMountain also is one of the joint venture partners of BM Eagle Holdings, which this summer agreed to purchase Louisville-based Kindred Healthcare’s 89 skilled nursing facilities for $910 million.
The hedge fund says on its website that it constructs its investment portfolio “to generate attractive returns independent of macro outcomes and without ‘calling the market,’ while considering macro factors at all times.” It has $22 billion in firm assets under management.
CORRECTION: This post was updated to remove erroneous information regarding a deal between KentuckyOne and Physicians Realty Trust.