* A look at Southern Regional and its suitors *
Southern Regional Medical Center
Location: Riverdale
2014 Revenue: $270.5 million
Beds: 331
Employees: 1,450
Outpatient Services: Spivey Station in Jonesboro includes a multi-specialty ambulatory surgery center, two diagnostic imaging centers and several physician offices.
Grady Health System
Location: Atlanta
2014 Revenue: $710.8 million
Beds: 953
Employees: 5,000
Outpatient Services: 6 neighborhood health centers, 3 primary care centers and specialty outpatient centers at the hospital
Prime Healthcare Foundation
Location: Ontario, Calif.
2014 Revenue: Undisclosed
Beds: 7,000-plus
Employees: 30,000-plus
Outpatient services: 38 acute care hospitals in 11 states.
With two potential suitors in the wings, the financially-ailing Southern Regional Medical Center heads into a critical week that could bring some resolution to its long-standing problems and a potential new owner.
A bankruptcy auction is scheduled for Wednesday for Southern Regional which filed for bankruptcy in July. A sales hearing for the 331-bed Riverdale hospital is slated for the following day.
Interest in the hospital deepened this week and took a surprising twist when news of Grady Memorial Hospital Corporation's last-minute $20.5 million cash bid for the beleaguered hospital emerged, creating the potential for a bidding war. Grady's bid eclipses the $18 million July offer from California-based turnaround specialist Prime Healthcare Foundation. Grady slipped its bid in on the Sept. 25 deadline.
The Grady bid stunned the hospital industry and Clayton County’s officials. Grady’s bid comes as a surprise because of its own history of financial struggles. But the hospital - considered Atlanta’s healthcare safety-net - has achieved a remarkable turnaround in recent years due to foundation investments and improved financial practices.
“It’s encouraging to see there’s some local interest in acquiring Southern Regional,” said Clayton County Commission Chairman Jeff Turner who learned about the Grady bid Thursday. “Either one, in my opinion. would be good as long as they meet our expectations and what the citizens of Clayton want and that is to have a quality hospital in our community.”
Officials at Southern Regional declined to comment on the Grady bid but said they were aware of the hospital’s interest. Southern Regional approached Prime about buying the hospital which has been struggling for years due to a heavy influx of uninsured and indigent care patients. Southern Regional filed Chapter 11 reorganization in U.S. Bankruptcy Court in Northern District of Georgia on July 30. During bankruptcy, other potential suitors have a chance to come in with better offers. Bankruptcy auctions operate like typical auctions with bidders going back and forth on their offers and possibly raising them. The sales hearing essentially helps tweak the final deal.
“I’m not in the health care business but I know Prime was going to sink a lot of money into the hospital and they weren’t going to do any layoffs,” Turner said Friday. “They were commited to keeping the hospital open at least five years.
Prime also has pledged $1 million to recruit doctors and plans to invest $50 million in Southern Regional.
Beyond calling the potential acquisition an “investment”, Grady officials have not given details about their intentions for the hospital.
Grady officials told Georgia Health News that outside of Fulton and DeKalb counties, the most patients they see are from Clayton County. Grady gets considerable financial support from Fulton and DeKalb taxpayers who pay to cover indigent patients. Grady’s corporate board will decide Tuesday on whether to move forward on its $20.5 million bid.
This would be Grady’s first hospital acquisition in recent memory, Fulton County Chairman John Eaves said Friday. It has generally extended its reach through clinics.
“Typically Grady has historically not been in expansion mode in terms of acquiring a hospital but I’m open to it if the business model can sustain the expansion,” Eaves said.
“I want to make sure Grady is able to maintain itself,” he said. “If it allows people in the southern part of Fulton better health care access then I’m all for it.”
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