Texas Health Resources buys Forest Park Fort Worth for $116.5 million

Arlington-based Texas Health Resources won the bidding war for Forest Park Medical Center Fort Worth, paying $116.5 million in a bankruptcy auction for the financially troubled, doctor-owned luxury hospital on the city’s southwest side.

Texas Health’s bid was $1 million more than the final offer made by Methodist Health System in Dallas, according to Deirdre Ruckman, the Dallas attorney representing Sabra Health Care REIT, the secured lender for the 150,000-square-foot hospital and adjacent 80,000-square-foot office building and parking garage.

Ruckman said the day-long auction Thursday was “very thoughtful … with numerous breaks.” She said HCA Healthcare, which bought a Forest Park hospital in Frisco and was mentioned as a possible suitor, did not make a bid.

“We’re making progess here. I think it will be good for the Fort Worth community,” said Ruckman, an attorney at the Gardere law firm.

Methodist Health System, which has more than 10 facilities in North Texas, mostly in Dallas, reached a deal last month to buy the Forest Park Medical Center in Southlake.

U.S. Bankruptcy Judge Mark Mullin is scheduled to conduct a hearing Thursday to finalize the deal, court records show.

Texas Health Resources owns 24 hospitals in North Texas, including Texas Health Harris Methodist Hospital Fort Worth in the city’s medical district and Texas Health Harris Methodist Hospital Southwest. The company has declined to talk about its plans for Forest Park, although an attorney said in court last month that it did not “want the hospital to go dark.”

“Now that the auction process is complete, we must wait for the court to review and endorse the results,” said Barclay Berdan, THR’s chief executive officer. “We believe it would be premature to discuss this matter until the court issues its ruling.”

Forest Park Medical Center Fort Worth is a 54-bed facility on 7 acres of the Edwards Ranch property. It was part of a chain of upscale hospitals built to offer patients more pleasant surroundings and individualized attention. But the business model quickly failed, and several hospitals have been closed or sold.

When the owner FPMC Fort Worth Realty filed for Chapter 11 bankruptcy late last year, it listed estimated assets of $100 million to $500 million and liabilities of $50 million to $100 million. Eventually, an appraisal set the property’s value at $122 million. Sabra Texas Holdings posted the property for foreclosure after the hospital missed an interest payment on a $66.8 million construction loan.the

At the time, Sabra officials said forcing the hospital into bankruptcy with the foreclosure was part of a strategy to allow the debtors to find “real buyers.” It worked.

During a bankruptcy hearing in late April, Methodist Health System protested making an initial $112 million offer put forth in a purchase agreement by Texas Health as the required bid to be a part of the auction. At that time, Methodist had offered $107 million, but wanted the bids to include cash and noncash considerations.

Mullin pushed FMPC Fort Worth Realty into accepting a sales procedure that didn’t make the $112 million a requirement for bidding, saying “it’s going to be a pretty short auction” if the other buyers don’t match that offer.

Sabra Health Care REIT said that it expects the winning $116.5 million bid will fully realize all amounts outstanding under the construction loan.

What set the Forest Park hospital chain apart was a business model in which some facilities sought upscale patients using private insurance, and not accepting Medicare or Medicaid coverage under the Affordable Care Act. Ultimately, that was an unsuccessful approach to attracting patients.

The Fort Worth hospital, however, distinguished itself from the other Forest Park hospitals by being in networks almost from the beginning, accepting all patients that came through its doors.

St. David’s Healthcare, a division of HCA, also is buying the Forest Park Medical Center in Austin for $115 million, according to D magazine. The Austin hospital ran into financial trouble and never opened.

This report includes material from the Star-Telegram archives.

This story was originally published May 13, 2016 at 11:42 AM with the headline "Texas Health Resources buys Forest Park Fort Worth for $116.5 million."