California Health System With $500 Million Debt Files Bankruptcy

Verity Health System, a California non-profit operating six hospitals, filed for bankruptcy Aug. 31 after decades of operating losses.

Verity, which suffered from mounting labor costs and low reimbursement rates failed to sell hospitals or merge with a stronger partner, according to a court filing. The non-profit has about $461.4 million of secured municipal debt, part of $500 million in long-term liabilities, the filing said. Nuveen held about $170 million of the bonds as of July 31, according to data compiled by Bloomberg.

Verity’s payor contracts with health plans are 20 to 43 percent below market and the system had ...