Forest Park Medical Center Fort Worth, which celebrated its first year of operation this month, filed for bankruptcy protection to avoid seeing the 150,000-square-foot hospital go through a foreclosure sale on the courthouse steps.
FPMC Fort Worth Realty Partners LP, which holds the construction loan on the hospital in the city’s southwest side, filed for Chapter 11 reorganization late Monday, which automatically blocked a foreclosure sale scheduled for Tuesday afternoon.
Jim Davis, CEO of Forest Park Medical Center Fort Worth, said the bankruptcy is not expected to affect operations at the hospital.
“We have a great team of physicians and nurses and staff that is focused on providing outstanding service and care in a collaborative environment,” he said.
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Sabra Texas Holdings, part of the Sabra Health Care REIT of Irvine, Calif., posted the hospital for sale last month after Forest Park Fort Worth missed an interest payment on a $66.8 million construction loan, according to court documents and company officials.
The foreclosure of Forest Park Medical Center Dallas was also stalled when a real estate entity, Forest Park Realty Partners III LP, filed for Chapter 11 for the hospital on North Central Expressway. Sabra has a $110 million mortgage on that facility, which closed in October.
Both hospitals are linked to three other doctor-owned, luxury hospitals that operated under the umbrella of Forest Park Medical Center. All of the hospitals have faced foreclosure, been sued for loan default or were forced into bankruptcy. The San Antonio hospital, like the Dallas one, has closed.
Sabra officials said Tuesday that while bankruptcy is sometimes a “delaying tactic,” the debtors in this case actually have “real buyers” interested in purchasing the properties.
We have a great team of physicians and nurses and staff that is focused on providing outstanding service and care in a collaborative environment.
Jim Davis, CEO, Forest Park Medical Center Fort Worth
“We think this is the right way to go,” said Rick Matros, Sabra’s CEO and chairman, during a conference call to discuss the situation. He said the court proceedings will bring details about the hospital chain’s business operations into the open. “We actually feel good about this process,” he said.
Davis and Sabra officials stressed that the property owners who filed for bankruptcy lease the facilities to physician-owned entities that operate them under the Forest Park name. None of the operating companies have filed for bankruptcy.
Sabra officials, in fact, praised the operators in Fort Worth and Frisco for how they are running the hospitals, saying that Fort Worth is “ramping up real nicely.”
“Operationally, Fort Worth and Frisco are exceeding expectations,” Matros said.
Detailed documents related to the 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.
Being in the network
Forest Park Medical Center Fort Worth, located on the Edwards Ranch property southwest of downtown, includes a 150,000-square-foot, 54-bed hospital on 7 acres, and and an 80,000-square-foot medical office building and parking garage.
Like the other Forest Park facilities, the Fort Worth hospital was built to offer 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 set the Forest Park chain apart was a business model that had some of the facilities seeking upscale patients using private insurance, and not accepting Medicare or Medicaid coverage under the Affordable Care Act.
Sabra said a recent appraisal set the value of the property at $122 million, indicating “excess collateral value of approximately $61 million.”
The Fort Worth hospital, however, has been in networks since March 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. Avoiding Medicare and Medicaid patients was “not the business that Fort Worth wanted to be in,” he said.
Matros said that Sabra knows one of the prospective buyers and raised the possibility that the Fort Worth, Dallas and Frisco hospitals could be marketed together. But the Frisco hospital, already in bankruptcy, is a separate case.
Last month, a federal bankruptcy judge said that the Frisco facility, which filed for Chapter 11 in September, can be sold at auction as “the best way to maximize value.” It has hired Dallas investment bankers Houlihan Lokey in an auction scheduled for February.
A week earlier, a St. Louis bank sued Forest Park Medical Center Southlake in federal court for defaulting on a $9.4 million loan for medical equipment.
Davis said he has spoken daily with Sabra officials and that they are acting “in good faith.” They realize it is a great hospital and that it would be a “pretty expensive endeavor to turn it into something else,” he said.