Friday, February 12, 2016
HCA North Texas will buy Forest Park Medical Center’s Frisco hospital for more than $96 million in what is expected to be the first in a string ownership changes for the ailing Dallas-based physician-owned system.
The Irving-based subsidiary of the Hospital Corporation of America agreed to a cash purchase of $96.25 million in a deal expected to close by March 31.
The hospital has been operating under Chapter 11 bankruptcy since last September, and the deal is subject to approval by a bankruptcy court judge. A hearing on that issue is scheduled for Feb. 18.
Forest Park Medical Center at Frisco is part of a failing upscale hospital chain. Sabra Health Care REIT Inc. (Nasdaq: SBRA) paid $119.8 million to acquire the hospital in 2013. The system initially relied on lucrative out-of-network fees for procedures, but that revenue stream dried up when insurance companies began requiring in-network contracts for physicians to be paid.
The hospitals quickly faced problems paying large debts. In addition, the Affordable Care Act precluded the physician-owned hospitals from participating in Medicare and Medicaid. The Forest Park hospitals in Dallas and San Antonio closed.
Sabra expects to see a loss in the first quarter of 2016 of $30 million to $35 million on its investments in the Frisco hospital and an $18.5 million debtor-in-possession loan Sabra provided to keep the hospital operating until finding a buyer, the company said in a news release.
“The expected range of loss is consistent with our discussion of a potential sale scenario during our last earnings call,” said Rick Matros, Sabra’s chairman and CEO. “In addition to putting this behind us, we will utilize the net proceeds from this sale to reduce leverage by paying down our revolving credit facility.”
Sabra also has a substantial financial stake in Forest Park facilities in Dallas and Fort Worth.
“We also look forward to resolution on Fort Worth and Dallas,” Matros said. “Given our first lien collateral position in those debt investments relative to the estimated property valuations, our investment in those two assets is more secure than the Frisco Hospital, which we owned. We expect to provide an update on the status of those two debt investments as soon as we have information ready to publicly disseminate.”
The deal will expand HCA’s growing presence in the North Texas health care market.
“We look forward to working collaboratively with physicians and clinicians to deliver a responsive, efficient, patient care environment at this facility,” said Erol Akdamar, HCA North Texas Division president.
Fast-growing HCA North Texas is one of the region’s largest health care providers and includes 15 hospitals, seven off-campus emergency rooms, more than 50 ambulatory sites, over 7,000 physicians and 15,000 employees in the Dallas-Fort Worth and Oklahoma City areas. HCA’s employment in DFW alone totals more than 11,600, making it the 12th largest employer in North Texas, according to Dallas Business Journal research.
In the past year, the health system has opened the full service Medical Center Alliance hospital, acquired the CareNow urgent care network, and added new trauma programs across its hospitals.
“We continue to expand our network of high quality health care services for patients in the growing DFW Metroplex,” Sam Hazen, HCA chief operating officer, said in a statement. “Our goal is to deliver excellence always in quality, convenient health care.”
The North Texas subsidiary’s parent, Hospital Corporation of America, has 165 hospitals in the United States and England.
Source : bizjournals.com
