Doctors Community Healthcare Corp. has billed itself as just what the doctor ordered for financially ailing Greater Southeast Community Hospital in Washington.
But to woo the bankrupt hospital's creditors, the privately held, for-profit Scottsdale, Ariz.-based hospital company had to overcome some wariness over its nontraditional lending practices and an 11th-hour pullout involving a recent deal with another struggling hospital.
Doctors Community was founded in 1991 by Paul Tuft, the current chairman and chief executive officer, who declined an interview with MODERN HEALTHCARE. The company pursues struggling hospitals, often by forming ownership partnerships with physicians.
Peter Isakoff, a lawyer representing Daiwa Special Assets Corp., New York, one of Greater Southeast's creditors, said he was satisfied with the final deal although he had previous reservations.
"We had concerns about whether the financing commitments were adequate," he said. "I don't have a crystal ball. I don't know them. I presume at this point that they're going to proceed, but certainly the concerns were expressed."
Under the current deal, $10.3 million of the $21.3 million Doctors Community is paying for Greater Southeast would go to Daiwa, Isakoff said. The Washington Post reported Daiwa was owed $12 million.
National Century Financial Enterprises, a Dublin, Ohio-based financing company that funds many of Doctors Community's deals, is financing Doctors' purchase of the hospital as well as providing an upfront loan to Greater Southeast to tide it over until the purchase is completed.
The company, which provides high-interest loans and lines of credit to struggling healthcare providers that may be shunned by traditional lenders, has an 11.5% stake in Doctors Community.
Early this year, Doctors Community promised to bail out financially ailing Boston Regional Medical Center in Stoneham, Mass., in a deal structured similarly to the acquisition of Greater Southeast.
Doctors Community promised to buy the 195-bed Boston hospital for $52 million but then pulled the plug when Boston Regional's losses began to mount (July 19, p. 30). Weeks later the hospital was plunged into bankruptcy and had to close.
The deal with Greater Southeast includes a commitment to lend $2.5 million to Greater Southeast immediately and to purchase the hospital for about $21 million.
Doctors Community also owns 523-bed Michael Reese Hospital and Medical Center in Chicago; 197-bed Pacifica Hospital of the Valley in Sun Valley, Calif.; 148-bed Hadley Memorial Hospital in Washington; 60-bed Brea (Calif.) Community Hospital; and 62-bed Pine Grove Hospital, a psychiatric facility in Canoga Park, Calif.