Forest Park Medical Center Fort Worth filed for bankruptcy in an attempt to avoid seeing its facility sold in foreclosure on the Tarrant County courthouse steps.
FPMC Fort Worth Realty Partners LP, which holds the loan on the hospital, filed for reorganization in North Texas bankruptcy court late Monday. Filing a bankruptcy typically blocks the sale of property. The hospital was scheduled for foreclosure this afternoon.
Sabra Texas Holdings, part of the Sabra Health Care REIT of Irvine, Calif., posted the hospital for sale earlier this month after Forest Park Fort Worth missed an interest payment on a $66.8 million construction loan, according to court documents and company officials.
A similar foreclosure sale of Forest Park Medical Center Dallas also was set for today. Another real estate entity, Forest Park Realty Partners III LP, also filed late Monday for bankruptcy protection, likely stopping any foreclosure sale.
Detailed documents about the two bankruptcy filings were not available on the federal court’s website Tuesday. But the Fort Worth filing listed estimated assets between $100 million to $500 million and liabilities of $50 million to $100 million. In Dallas, the company listed assets of $50 million to $100 million and liabilities of $100 million to $500 million.
The bankruptcy attorney for both real estate companies could not be reached by the Star-Telegram Tuesday. An attorney acting as a trustee for the foreclosure did not return a phone call.
Sabra officials are scheduled to talk about the bankruptcies during a conference call this afternoon.
The Fort Worth property is linked to four other doctor-owned, luxury hospitals under the umbrella of Forest Park Medical Center in Dallas that have faced foreclosure or have been sued for loan default or forced into bankruptcy. The hospitals in Dallas and San Antonio have closed.
Jim Davis, the CEO of Forest Park Medical Center Fort Worth, said the bankruptcy concerns the real estate side of the company and that it should not “impact operations at all.” Davis stressed that the operational company for Forest Park Medical Center Fort Worth is separate and did not file for bankruptcy.
“We have a great team of physicians and nurses and staff that is focused on providing outstanding service and care in a collaborative environment,” Davis said.
Forest Park Medical Center Fort Worth, on the Edwards Ranch property southwest of downtown, celebrated its one-year anniversary this month. The 150,000-square-foot, 54-bed hospital sits on 7 acres, and the complex includes an 80,000-square-foot medical office building and parking garage.
Like the other Forest Park facilities, the Fort Worth hospital operated on a business model that promised its patients more pleasant surroundings than conventional hospitals — natural lighting, interior decor with mood lighting and private rooms — as well as more individualized attention.
But what really set the Forest Park apart was a business model that had the facility seeking upscale patients with private insurance and not Medicare or Medicaid medical coverage under the Affordable Care Act.
The decision to not be “in-network” clearly hurt Forest Park because the healthcare law precluded the physician-owned hospitals from participating in Medicare and Medicaid, said Rick Matros, Sabra's CEO and chairman, in an earnings call earlier this month.
Davis, however, said the Fort Worth hospital, while sharing a name and services through a management company, did not accept that business model. The Fort Worth facility has been in network since March of this year and “accepts all patients that come through the door.”
“From before opening the doors we had the goal of being an in-network provider,” Davis said. That is “not the business that Fort Worth wanted to be in,” he said.
Even in posting the Fort Worth hospital for foreclosure, Sabra recognized its value.
Sabra Chief Financial Officer Harold Andrews said during the earnings call this month that his company was considering a “credit bid” that would allow it to buy the property at an amount just above the highest bidder, giving Sabra a chance to bring in a new tenant or sell it in a fully marketed transaction.
He said a recent appraisal set the value of the property at $122 million, indicating “excess collateral value of approximately $61 million.” Apparently $6 million earmarked for tenant improvements in the office building has not been spent, he said.
The only way Forest Park Medical Center can stop the foreclosure is through the “judicial process” because the agreements they signed with Sabra accelerate the process, allowing for the sale, Andrews said. Filing for bankruptcy is the one way Forest Park could slow down but probably not prevent the foreclosure, he said.
Forest Park could also try to negotiate something, especially “given the value in Fort Worth,” Andrews said. “So that'll play itself out over the next couple of weeks.”