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GILROY—Attorney General Kamala D. Harris on Dec. 3 granted conditional approval of a transaction that will allow a change of control and governance of the Daughters of Charity Health System, a network of hospitals that includes Saint Louise Regional Hospital in Gilroy.Harris’ approval includes strong conditions to ensure the continuity of essential health care services for vulnerable communities at the network’s six health facilities and requires many essential health care services to remain in place for at least 10 years.“This approval will maintain the charitable purpose of the Daughters of Charity Health System, ensuring that low-income Californians will continue to have access to critical health care services, including emergency, trauma, surgical, and reproductive health services,” Harris said.Along with Saint Louise, the transaction includes St. Vincent Medical Center in Los Angeles, St. Francis Medical Center in Lynwood, O’Connor Hospital in San Jose, Seton Medical Center in Daly City and Seton Coastside in Moss Beach.Under the system restructuring and support agreement, Integrity Healthcare, LLC and certain funds managed by BlueMountain Capital Management, LLC will execute a 15-year management agreement and will pay $100 million for the option to purchase the Daughters of Charity Health System, according to a news release from the attorney general’s office.These certain funds will also provide $150 million of guaranteed financing to support the health system’s financial and capital needs and help with the $180 million capital expenditures commitment, the release notes.Under the terms of the agreement, the health system's name will be changed to Verity Health System of California, Inc. and its corporate status will be changed from a nonprofit religious corporation to a nonprofit public benefit corporation.  Another condition stipulates that for at least the first three years of the agreement, the health system will continue to operate as a nonprofit public benefit corporation. After three years and before the expiration of the 15-year agreement, the certain funds managed by BlueMountain Capital Management, LLC can exercise their option to purchase the health system.The attorney general’s office notes that this is the largest and most complex nonprofit hospital transaction in California history. If the parties agree to Harris’ conditions, the proposed transaction can protect the health system—which is currently losing millions of dollars a year—from bankruptcy.Harris approved the transaction with conditions designed to ensure continuity of care for Californians who rely upon the health system for health care services. Her conditions include:For 10 years, St. Francis, O’Connor, Saint Louise and Seton Medical Center must operate as acute care hospitals and offer emergency services.For ten years, the six facilities must provide the same types and/or levels of emergency and non-emergency services to Medi-Cal beneficiaries and maintain Medi-Cal managed care contracts at each of the facilities.$180 million must be invested in capital improvement expenditures at the facilities.Charity care for needy patients and community benefits must be provided at historical levels.Essential health care services must continue to be provided at all facilities.According to the news release, the attorney general’s decision comes after consideration of public comments, consultation with an independent health care expert, and discussions with concerned community members. The transaction involved a competitive bidding process administered exclusively by the Daughters of Charity Health System.The deal is not perfect but is the only viable option for keeping the hospital system alive, said Desi Murray, director of the Catholic Hospitals Division at the California Nurses Association. The nurses’ union had urged Harris to include a list of demands to be included in the final deal at a public forum in October.“Most of those demands have been met,” Murray said. “It could be better, but the crucial matter is whether the hospitals remain intact.”The deal will bring a feeling of certainty and security to patients and employees, Murray said.“We want BlueMountain to agree sooner rather than later so we don’t have a hiatus as in the Prime sale, where they asked for more time and then failed to go through with their promise,” Murray said, referring to an earlier purchase attempt by Prime Healthcare.The health system is confident that the sale will go through, said spokesman Rick Rice.“BlueMountain is now in the process of reviewing these conditions and will make a decision as soon as possible,” Rice said in a statement. “We will stay in close contact with them. We continue to believe this transaction will close in the very near future.”The full list of Harris’ conditions can be found here: https://oag.ca.gov/sites/all/files/agweb/pdfs/charities/pdf/chs.pdf