A Scottish hospital that was touted as a cutting-edge venture in private, for-profit medicine in the United Kingdom is up for sale after only six months of operation.
The facility in Glasgow, Scotland, was conceived by two Harvard Medical School pediatric surgeons (Aug. 26, 1991, p. 40).
With fewer than 10% of its 260 beds occupied, the hospital, called Health Care International, suffered a severe cash shortage and was unable to secure additional credit from its bankers. HCI, which opened in June, is continuing to operate but has been placed in receivership with Arthur Andersen & Co.
In the United Kingdom, receivership is the process under which a corporate organization is shielded from creditors in an attempt to restructure and restore financial health.
Arthur Andersen referred calls to a London-based spokesman for HCI. HCI's spokesman declined to quantify the total amount of debt and equity at stake and said there was no estimate available of the hospital's value. HCI cost $288.5 million to set up, according to press reports.
While HCI continues to admit patients, the receiver will attempt to sell the hospital's assets, the spokesman said. A number of potential buyers have expressed interest, but he refused to name the suitors.
Asked why the hospital failed to generate sufficient cash, the spokesman conceded that "the marketing of it was a long way behind the construction." It's a problem that Arthur Ander-sen is attempting to address, he added.
Founded by Raphael H. Levey, M.D., and Angelo Eraklis, M.D., the hospital was intended to lure private patients seeking the latest medical technology and top-notch care.
The venture attracted physicians from several prestigious teaching hospitals in the United States.
HCI's largest investors are Montgomery Medical Ventures, a San Francisco-based venture capital company, with a 26.3% stake; Harvard Management Co., which manages Harvard University's endowment, with 21.5%; and the two founding physicians, with a total of 11%.
Harvard Management Co. would not speak to MODERN HEALTHCARE about its investment, saying that it never comments on any of its holdings.
Montgomery Medical Ventures also declined comment, and referred inquiries to HCI.