Bankruptcy May Lead to Purchase by Prime Healthcare
After years of revenue loss, Southern Regional Medical Center of Riverdale, Georgia filed for Chapter 11 bankruptcy protection on July 30, 2015. Southern Regional Medical Center is the only comprehensive healthcare facility in Clayton County. Riverdale is located 12 miles south of Atlanta.
This decision from the hospital comes only a week after Prime Healthcare Foundation, a California based healthcare system, proposed to the court in Clayton County that it was interested in buying the hospital. They also added in their letter to the court that they would guarantee to keep the hospital open and fully operational for a minimum of 5 years.
Uninsured Patients Led to Bankruptcy
Southern Regional Medical Center had a disproportionate amount of care that went uncompensated. This carried on for several years before the 331 bed hospital decided to file for Chapter 11 bankruptcy protection.
In 2014 alone, over 30% of the hospital’s patient intake was uninsured. Southern Regional Medical Center provided $21 million in care that saw no reimbursement from insurance companies. Seeing that hospital could not continue to exist with such financial trends, the board opted to file for bankruptcy protection.
The hospital claims it needs funds totaling $6 million to continue operating normally.
“If we can’t get that funding, we can’t survive,” said hospital CEO Kim Ryan. “If we don’t receive it soon, we’ll have to close services or shut the doors.”
With some of the promises of Prime Healthcare, such as a pledged $50 million of money to be infused into Southern Regional Medical Center, the hospital is hoping to avoid anything of that sort.
Prime Healthcare Purchase Financially Struggling Hospitals
One of the aspects that Prime Healthcare has become nationally famous for in the last several years, is buying out hospitals that are financially distressed, or have already filed for bankruptcy protection.
Their healthcare system includes over 20 hospitals in 11 states throughout the country. Southern Regional Medical Center would be Prime Healthcare’s first hospital it owns in Georgia.
During the bankruptcy proceedings, any other interested buyer can put in a better bid to purchase Southern Regional Medical Center.
Hospital Will Continue to Operate
“During the Chapter 11 process, the hospital will continue to provide high-quality care to its patients,” said a hospital official in a press release. “Southern Regional Medical Center will meet its current financial obligations to its employees and vendors,”
Southern Regional Medical Center’s board of directors are very pleased with Prime Healthcare’s plan in purchasing the hospital. They feel it’s the best move for the hospital and its patients.
“We are grateful for the support Prime Healthcare Foundation has provided in connection with its letter of intent and the proposed sale,” said Jim Adams, Southern Regional’s board chairman. “The purchase of Southern Regional will preserve jobs, continue to provide access to healthcare in Clayton County and allow us to emerge from bankruptcy in a relatively short time frame.”