Providence Makes Bid for Santa Monica Facility

After several months of turmoil and rumors of a potential sale, a deal could be imminent for St. John’s Health Center. And the owner of three major San Fernando Valley hospitals, Providence Health & Services, a Catholic non-profit based in Renton, Wash., is in exclusive talks to add the Santa Monica hospital to its portfolio. The group owns Providence Holy Cross Medical Center in Mission Hills, Providence Tarzana Medical Center and Providence St. Joseph Medical Center in Burbank, in addition to hospitals in Torrance and San Pedro. If the deal goes through, it would add 266 beds to the more than 1,800 Providence has between its five regional hospitals. St. John’s is owned by Denver-based Sisters of Charity of Leavenworth Health System and was built in 1942. But things haven’t been going well at the hospital. In November, St. John’s fired much of its local board members and two executives. Also, the hospital was in court earlier this year accusing a nurse recruiting service of bribery and fraud that cost St. John’s almost $700,000 in fees. No nurses ever arrived at the hospital. Jim Lott, executive vice president of the Hospital Association of Southern California, a Los Angeles trade group, said the hospital would make an important addition for Providence. He said the hospital has lots of celebrity support and a steady client base. “It has good community reputation and where it’s located is attractive,” he said. Lott said it isn’t possible to estimate what the price tag on the hospital could be as a number of variables, including debt load, market share and free cash flow can play a major role. Providence has declined to comment on the negotiations. But Patricia Aidem, spokeswoman for Providence, said the deal is far from done. “Providence was selected by the Sisters of Charity to participate in exclusive talks, but it’s the beginning of a very thorough due diligence process,” she said in an email. If a deal is struck between the two Catholic systems, it will still be subject to review from the California attorney general’s office and the Archdiocese of Los Angeles. Several other groups have been involved in what has become a public bidding process, including Catholic chains Dignity Health of San Francisco and Ascension Health of St. Louis. In addition, a bid was made by L.A. billionaire Patrick Soon-Shiong, who had the support of the Archdiocese. Michael Slubowski, chief executive of the group that owns St. John’s, said the values shared between the two organizations played a role in the selection. “Providence shares a deep understanding and commitment to all aspects of Catholic sponsorship, identity and stewardship,” he said in a prepared statement. Lott said he was not surprised by Providence’s “front runner” status and he expects a deal to get done in short order. “They’ve made a commitment and have a written agreement,” he said. “They have closed out all competitors.”