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Hospital sale nears completion

Walker County Hospital District places $8.1 million bid to acquire HMH

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A year-long effort to save Huntsville Memorial Hospital is finally nearing completion. 

Earlier this week, the Walker County Hospital Corporation announced that it has agreed to a multimillion dollar asset purchase agreement. This essentially ended months of negotiations for the bankrupt health care provider.

In stepped the Walker County Hospital District, a taxpayer-funded government entity that has floated the hospital corporation’s financial woes dating back to September 2018. Facing threats of a possible closure, the hospital district — whose main focus is to monitor funding of indigent care — was forced to give the privately-funded hospital corporation nearly $9 million in the form of subsidies and forgiven rent payments.

The hospital district and its new partner Community Hospital Corporation — a health care provider out of Plano — have now formed Huntsville Community Hospital Inc. The new group, which will be managed in a joint-venture partnership between the hospital district and CHC, is expected to be awarded the hospital corporation’s assets following a mid-December hearing before the Hon. David R. Jones of the United States Bankruptcy Court for the Southern District of Texas.

The hospital district and Huntsville Community Hospital Inc. was named the 'stalking horse' bidder, with a proposed purchase price of $8,129,500. The bid includes $4.6 million to acquire the accounts receivable ledger, a $3 million credit bid for the operations and fixed assets and $50,000 in cash for real property. The hospital district would also be responsible for up to $479,500 in bankruptcy costs.

“This is a very important step in this transaction,” hospital district chairperson Anne Karr Woodard said following the asset purchase agreement being signed. “I am glad the district and the corporation were able to work together to get this completed.”

Hospital corporation officials echoed similar sentiments.

“This is an encouraging development, and we are pleased the (hospital) district and CHC continue to make progress,” corporation officials said in a release. “We look forward to emerging from this process a more focused, profitable hospital that’s able to provide quality care for generations to come. In the meantime, we remain focused on our number one priority: providing our patients the high-quality, compassionate healthcare they deserve.”

WCHC owns nearly 10% of all fixed assets in the acute care facility, while the taxpayer-funded hospital district owns the remaining.

So how did we get in this situation?

The Walker County Hospital Corporation, which is managed by a group of local citizens and doctors, filed bankruptcy last month after losing millions of dollars due to inflated salaries, alleged insurance fraud and failed attempts to establish a network of clinics.

The financial struggle was brought to the hospital district in September 2018, as the corporation was unable to meet payroll, according to records obtained by The Item. The interim CEO at the time, Michael Morgan, requested the hospital district provide subsidies that would “get them over the hump.” The taxpayer-funded group agreed and supplied $2.9 million, as they went shopping for a new operator.

What’s next

Qualified bidders have until Dec. 16 to make a better offer than what is currently being offered by the hospital district and Huntsville Community Hospitals Inc. If additional bids are received through this competitive bidding process, an auction will take place on Dec. 18, followed by a final hearing on Dec. 20.

The next bankruptcy hearing is scheduled for Dec. 4 at 10:30 a.m. at the Bob Casey Federal Courthouse, located at 515 Rusk Street in Houston.