Debt between $100 million – $500 million
Monroe Hospital, based in Bloomington, Indiana, has filed Chapter 11 bankruptcy citing assets at between $10 million and $50 million and a debt ten times those numbers.
The 32-bed hospital reports that they had a major loss in income due to a loss of patients who are now seeking care at Indiana University Health’s Bloomington Hospital located less than five miles away. According to Joe Roche, Monroe Hospital’s CEO, hospital employees will not be laid off during the bankruptcy and sale process which may take several months.
“The hospital will continue to remain open, is operating its assets in the ordinary course of business, patients services shouldn’t be impacted, nor are employee wages,” said Monroe Hospital’s attorney Jim Irving.
Facility Lease Makes Up Largest Debt
Bankruptcy documents show that the hospital defaulted on its facility lease with MPT Bloomington LLC, and on its loan agreement with an MPT affiliate, both of which approximately $121.8 million.
Monroe Hospital’s largest unsecured creditor is shareholder Vibra Acute Care LLC, owed about $3.4 million. Another $3.1 million owed to Bloomington physician practice Premier Healthcare LLC. The hospital has other large debts as well, including $694,000 owed to Bloomington Anesthesiologists, $304,000 owed to the Indiana Hospital Association and $61,000 owed to the Katz Sapper Miller accounting firm.
Prime Healthcare Considering Purchase
Following the defaults, MPT terminated their lease with the hospital, but has allowed them to stay as a “holdover” tenant during the hospital’s sale. On July 23, 2014, MPT, the hospital and its largest shareholder, Pennsylvania-based Vibra, entered into an agreement to consider sale of the hospital to a Prime Healthcare, a national hospital operator based in Ontario, California.
According to hospital officials, MPT is expected to finance the hospital during bankruptcy by providing additional credit of up to $5 million. They will also allow the hospital to use cash representing collateral for its secured claims. Hospital’s attorney Jim Irving said that he doesn’t know if Prime Healthcare will buy the hospital, however, their offer will open the process for other companies to also bid.
Two years ago, Monroe Hospital signed a management agreement with St. Vincent Health under which St. Vincent took responsibility for Monroe’s quality and safety efforts, finance functions, physician relations and patient satisfaction. St. Vincent’s ended those services last year, however, longtime St. Vincent executive Joe Roche was installed as Monroe’s CEO.
St. Vincent is another of Monroe Hospital’s creditors, with a debt of $170,000 accrued for cardiac care and orthopedic surgeries provided to Monroe patients by St. Vincent physicians. Even after the hospital is sold, St. Vincent will try to continue its clinical relationship with Monroe.
“We’ve had a longstanding clinical affiliation and clinical relationships with physicians in Monroe County for a number of years,” said St. Vincent spokesman Johnny Smith. “We’re looking to continue those relationships.”