A nasty legal squabble over the fate of a Memphis, Tenn., hospital ended last month when the hospital's operators agreed to turn over control of the 243-bed facility to its owner, Healthcare America, an Austin, Texas-based hospital chain.
Regent Health Group, an Austin-based company that manages Eastwood Hospital in Memphis, filed for Chapter 11 bankruptcy reorganization last month after Healthcare America demanded payment of $8.6 million in past-due rent for the hospital. Eastwood is the only hospital operated by Regent.
Last week, Healthcare America and Regent's officers agreed to a compromise in which Healthcare America would take operating control of the hospital and Regent would pay Healthcare America $1.3 million in cash for unsecured claims. In addition, Healthcare America agreed to pay Regent's three principals, Bill Billingsley, Steve Bell and Brent Jorgensen, $430,000 in exchange for their agreement not to operate a competing healthcare business in Memphis.
The U.S. Bankruptcy Court in Memphis must approve the compromise. With court approval, Healthcare America would take operational control in early to mid-October.
This is the third time this year that Healthcare America has wrested control of one of its hospitals from a previous operator. All of those operators were delinquent in their rent payments, said Greg Herring, Healthcare America's vice president. Earlier this year, Healthcare America took operating control of 40-bed Shadow Mountain Institute in Tulsa, Okla., and 139-bed Tustin (Calif.) Hospital Medical Center. Both hospitals had been owned by HealthVest, a real estate investment trust that merged in January with Healthcare International to form Healthcare America.