Texas Health buys Fort Worth hospital as it shuts down

Texas Health Resources completed its purchase of the bankrupt Forest Park Medical Center Fort Worth Wednesday, a day after the hospital’s previous operators unexpectedly shut down the state-of-the-art facility and laid off all its employees.

Arlington-based Texas Health is paying $116.5 million for the 54-bed, 150,000-square-foot hospital, an 80,000-square-foot office building next door and a multi-level parking garage. It also is writing a $4.5 million settlement check to the hospital’s previous operators.

Texas Health Resources was the victor in a bankruptcy bidding war earlier this month with Methodist Health Systems in Dallas. U.S. Bankruptcy Judge Mark Mullin recently approved the sale.

Originally, THR was expected to finalize its purchase Tuesday, but was unable to do so. The previous management team opted later that day to shut down the hospital, closed the emergency room and told employees that they were being laid off.

Barclay Berdan, THR’s chief executive officer, said he expects the hospital to be closed for 30 to 45 days as his company seeks the necessary operating licenses. He said the former Forest Park facility will act as a satellite to Texas Health Harris Methodist Southwest Hospital, located about five miles to the south.

Forest Park Medical Center Fort Worth is located on seven acres of the Edwards Ranch property. It opened its doors about a year and half ago.

“It is like starting a hospital from scratch,” Berdan said. “We haven’t had a year and a half to do that while building something, so we’re trying to cram it all into a couple of months.”

The Forest Park facility will be operated like Texas Health Resources’ other hospitals, facilities that are available to all types of patients, Berdan said. The original business model of the previous operator was to cater to an upscale clientele with primarily private insurance.

“We are operating a community asset and it needs to be available regardless of their (the patient’s) payer source,” Berdan said. “We’re happy to get it. We’re delighted to get it.”

Forest Park’s previous management did not return a phone call from the Star-Telegram and Wednesday morning there weren’t any signs at the hospital stating that it was closed. An employee at the door said that all of the patients had been discharged and the employees let go.

Court records show that the former Forest Park facility employed 175 people, including 115 full-time employees and 60 part-timers.

Jeff Prostok, one of their bankruptcy attorneys, said they shut down the hospital late Tuesday because they thought the sale would go through that day.

“We are ceasing operations. We are in a layoff situation,” Prostok said. “We let the folks go because there really wasn’t anything for them to do. We didn’t want them around doing nothing.”

Berdan wouldn’t speculate on why the hospital was shut down except to say that “the folks who owned and operated it were bleeding cash and they were anxious to get out of that situation.”

Failed business model

Forest Park Medical Center Fort Worth was part of a chain of hospitals that operated on a philosophy of giving patients more pleasant surroundings — natural lighting, interior decor with mood lighting and private rooms — as well as more individualized attention.

What really set the Forest Park approach apart, however, was that it tried to appeal to clients with private insurance, not Medicaid and Medicare coverage under the Affordable Care Act. The decision to not be “in-network” clearly hurt Forest Park because the healthcare law precluded physician-owned hospitals from participating, investors and analysts said.

And while the former management of Forest Park in Fort Worth said they were “in-network” and accepting all patients, it still struggled to make ends meet.

When FPMC Fort Worth Realty, the owner of the real estate, filed for Chapter 11 bankruptcy last year, it listed 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, part of the Sabra Health Care REIT of Irvine, Calif., posted the property for foreclosure after the hospital missed an interest payment on a $66.8 million construction loan. Sabra’s actions forced the owners and operators of Forest Park into bankruptcy.

Initially, Texas Health Resources offered $112 million for Forest Park, but bumped its bid to $116.5 million in a competition with Methodist Health Systems. Eventually, Methodist went on to buy the Forest Park hospital in Southlake, from different owners, for $17.6 million including debt.

A nice fit

Berdan said the Forest Park facility fits nicely into his company’s plans, even though its Texas Health Harris Methodist in the city’s medical district, and Texas Health Harris Methodist Hospital Southwest, are each about five miles away. Texas Health owns more than two dozen hospitals in North Texas.

“Both of the hospitals are running consistently very full and we are working on plans to expand those campuses,” Berdan said. He said buying Forest Park more immediately addresses the need for additional capacity. “You expand capacity without building something,” Berdan said.

Texas Health Harris Methodist has 720 beds and Texas Health Harris Methodist Southwest 209.

Berdan said Texas Health will have to hire staff to run the Forest Park hospital and that they’ve already had a “town hall meeting” with the hospital’s former employees. Of the $4.5 million being paid to the previous operators, $1 million is set aside for administrative claims and their employees.

Prostok said the previous operators are already working on a severance package for those who don’t get hired by Texas Health Resources.

This report includes information from the Star-Telegram archives.

This story was originally published May 25, 2016 at 6:40 PM with the headline "Texas Health buys Fort Worth hospital as it shuts down."