Biotech Billionaire Gets Controlling Interest In California Hospital System

Patrick Soon-Shiong is a figure of increasingly prominence — and controversy — in the healthcare field. That notoriety is not likely to abate now that his company, NantWorks, has picked up a majority stake in Integrity Healthcare, which manages the six California hospitals in Verity Health System.

“Our commitment is to enhance the scope and resources of Verity Health so that, together, we can deliver the breakthrough treatments and cures that save lives, provide better patient outcomes and improve well-being,” Soon-Shiong said in a statement touting the acquisition, according to The Mercury News.

But some are fretting that the biotech billionaire is more interested in bolstering his empire than providing the steadying management that the hospitals desperately need.

The facilities in the Verity Health System — formerly know as the Daughters of Charity — are considered safety-net hospitals and have been enduring the same financial struggles faced by similar institutions coast to coast. BlueMountain Capital, a New York-based hedge fund, bought the financially-strained hospital group in 2015, setting it up under the Integrity Healthcare shingle.

Although the original acquisition of the hospitals included a pledge from BlueMountain Capital to maintain services for at least a decade, it didn’t take long before the hedge fund started shopping Verity Health. According to reports, Soon-Shiong has been negotiating the purchase for at least six months.

Even as all parties are signaling a continued commitment to the charitable mission of the hospitals, Soon-Shiong is not hesitant to acknowledge he sees the facilities as a staging ground for his broader healthcare work, potentially including the genomic testing that his company has put at the forefront.

“I’ve spent the last decade of my life quietly building this infrastructure,” Soon-Shiong explained to the Los Angeles Times, adding that the group of hospitals “will provide an experiment at scale.”

Soon-Shiong’s wealth is largely from his part in the creation of Abraxane, a cancer drug. Abraxis, the company Soon-Shiong started in order to sell the drug, was sold in 2010 for a price in the neighborhood of $3 billion. He’d previously sold another pharmaceutical company he launched, picking up about $4.6 in the deal.

But Soon-Shiong started his healthcare career as a surgeon. Among his achievements, Soon-Shiong performed the first successful implant of an artificial pancreas. That procedure took place in 1993, at St. Vincent Medical Center in Los Angeles. St. Vincent is one of the hospitals Soon-Shiong just added to his portfolio.

Soon-Shiong, who was born in South Africa to parents who had fled their native China during World War II, said that personal history informs his outlook as he takes the reins of Verity Health.

“I was an immigrant to this country, and I now have the resources to give back to society,’’ he said, according to the Mercury News. “This is an opportunity right now to take 21st century medicine and make it available to all.”

In addition to St. Vincent Medical Center, the other hospitals in the Verity Health System are: O’Connor Hospital in San Jose, St. Louise Regional Hospital in Gilroy, Seton Medical Center in Daly City, Seton Coastside in Moss Beach, and St. Francis Medical Center in Lynwood.