A Boston teaching hospital and a neighborhood health center jointly acquired ailing Winthrop (Mass.) Hospital, closed it and then reopened it last week as an ambulatory-care facility.
The $2.4 million purchase ends the hospital's two-year fight to reorganize under bankruptcy protection and remain an acute-care facility.
The new owners, Boston University Medical Center and East Boston Neighborhood Health Center, had submitted an earlier offer to buy the hospital for $2.8 million, along with another $3 million in renovation and loan commitments. But that offer was withdrawn when further investigation concluded the area couldn't support an acute-care hospital (April 25, p. 21).
The 92-bed hospital was operating at a capacity of about 45 acute-care beds, said Paul Drew, vice president of professional services at Boston University Medical Center.
Late last month, the joint venture renewed its interest when the U.S. Bankruptcy Court in Boston took control and asked for sealed bids, Mr. Drew said. "That's why we were able to change the nature of the discussion" over the use of the facility, he said. The venture's bid stipulated that the facility cease acute-care services.
A 24-hour urgent-care unit continued without interruption, however, and by July, the facility is scheduled to open non-acute pediatric and obstetric services, he said.
The $2.4 million price included about $700,000 in costs of shutting down the operation and transferring patients. The hospital had been managed for two years by Quorum Health Resources. The new owners paid an additional $290,000 to settle the contracts of Quorum and other local providers of contract services, Mr. Drew said.
Bondholders are owed $12.1 million in principal, said Richard Trembowicz, an attorney for Winthrop, but they stand to get no more than what remains from the $2.4 million offer and from accounts receivable. The same pool must be used to pay accrued employee vacation time, he said.
Two unsuccessful bidders would have kept the hospital going: Choate Health System, based in Woburn, Mass., and Medical Management of America, a Chicago-based operator of surgical centers with an emphasis on ophthalmology.
Choate was interested in the hospital's 51-bed psychiatric unit, which had a Medicaid contract with the state, said Gerard Baker, Winthrop's chief financial officer. Nashville, Tenn.-based Mental Health Management of America was managing that contract for mental health services, Mr. Baker said.