HCA buying bankrupt Forest Park Medical Center in Frisco
HCA North Texas has agreed to purchase Forest Park Medical Center in Frisco, part of a string of smaller, upscale hospitals that started in Dallas and now are tangled up in bankruptcy court.
HCA agreed to pay $96.25 million for the 54-bed, state-of-the-art facility from Sabra Health Care REIT. The deal is expected to be completed by the end of the first quarter but, since the Frisco hospital filed for bankruptcy in September, it must be approved by a judge at a hearing Feb. 18.
The sale of the Frisco hospital comes as two Tarrant County hospitals associated with the chain work their way through bankruptcy. Forest Park Medical Center Fort Worth filed in November and Forest Park Medical Center at Southlake sought Chapter 11 protection in January.
The acquisition will add to HCA’s growing presence in North Texas. The chain already owns facilities across the region including Plaza Medical Center and Medical Center Alliance in Fort Worth, Medical Center Arlington and North Hills Hospital in North Richland Hills.
“We look forward to working collaboratively with physicians and clinicians to deliver a responsive, efficient, patient care environment at this facility,” says Erol Akdamar, president of HCA North Texas Division, which is based in Irving.
Sabra Health Care, which made a big bet on the Forest Park business model — hospitals with more pleasant surroundings such as private rooms with mood lighting as well as more individualized care — has been shedding its $284.4 million investment in the chain.
In a statement, Sabra’s Chairman and CEO Rick Matros said that selling Frisco allows the company “to move forward and focus on building the company” without the Forest Park assets.
The company expects a $30 million to $35 million loss on the Frisco hospital in the first quarter. When the hospital, which Sabra Heath Care owned, filed for bankruptcy it reportedly had $10 million to $50 million in assets and liabilities.
The Frisco hospital filed for Chapter 11 bankruptcy last fall as the chain, which opened several hospitals over the past couple of years, quickly faced problems meeting large debts. The chain got into trouble because of the type of patients it coveted and those it didn’t.
The physician-owned Forest Park’s initial approach was to strictly seek out more upscale patients with private insurance instead of government-sponsored healthcare through Medicare or Medicaid under the Affordable Care Act.
The decision to not be “in-network” clearly hurt some of the hospitals, Matros said last year. While doctors didn’t like Medicare and Medicaid because of the reimbursement rate, he said, the missing volume of patients robbed them of a much needed financial cushion.
Forest Park’s Dallas hospital suddenly shut its doors on Oct. 30. Soon after, the San Antonio hospital closed because it had “run out of cash” and stopped paying its rent.
In November, Forest Park Medical Center Fort Worth, located on the Edwards Ranch property southwest of downtown, filed for bankruptcy to block the 150,000-square-foot hospital from being sold on the courthouse steps after defaulting on a $66.8 million construction loan.
In its filing, the Fort Worth hospital listed estimated assets of $100 million to $500 million and liabilities of $50 million to $100 million. But an appraisal set the value of the property at $122 million, indicating excess collateral value of approximately $61 million.
Operators of the Fort Worth hospital also were praised by Matros. In December, he said the facility was “exceeding expectations.” One reason may have been that the Fort Worth hospital, unlike some of the others, had been in network and accepting all patients that came through the door.
Matros also said the Fort Worth hospital had “real buyers” interested in purchasing it. In a statement Thursday, he said that Sabra is still looking forward to a resolution of its investment in that property.
The Forest Park hospital in Southlake filed for bankruptcy in January. It had earlier been sued by a Missouri bank for defaulting on a $9.4 million loan for medical equipment. In its filing it listed both assets and liabilities of $10 million to $50 million.
When it filed, the hospital said it owed its landlord, GAHC3, $11.7 million in back rent. It also reported that it was having trouble meeting payroll and owed $2.4 million in property and franchise taxes, court records indicate.
On Thursday, a federal bankruptcy judge signed an order allowing a debtor-in-possession loan from GAHC3 of $16.3 million to allow the hospital to keep operating. The loan agreement includes stipulations that the hospital be sold by May.
Court records do not show that Sabra Health Care is involved with the Southlake hospital.
This story was originally published February 11, 2016 at 8:23 AM with the headline "HCA buying bankrupt Forest Park Medical Center in Frisco."