Trying to leave its tainted past behind, Logan (W.Va.) General Hospital has filed a reorganization plan with the U.S. Bankruptcy Court in Charleston, W.Va., that involves joining a local not-for-profit system to get a loan guarantee.
The long-anticipated move came a few days after the former president of the financially ailing hospital was indicted by a federal grand jury in Parkersburg, W.Va., on 24 counts of embezzlement, fraud, conspiracy, tax-related crimes and money laundering.
C. David Morrison faces up to 110 years in prison and fines of up to $3.3 million if convicted of all the charges, which among other things allege the use of more than $4 million of hospital funds to pay off debts not related to the hospital. Some of those debts were incurred in connection to a real estate company he co-owned with Donald Gene Cabell, former director of collections at the hospital.
Cabell was indicted last November (Nov. 15, 1999, p. 21). Morrison's arraignment is scheduled for March 9.
"My focus is to look ahead, and really not at the past," said Tom Senker, principal of Grace HealthCare Advisors, a healthcare consulting firm based in Morgantown, W.Va., hired to turn the hospital around. Senker is also the hospital's interim president and chief executive officer.
"I think the general sentiment is that people want to see this thing over with," he said.
The bankruptcy reorganization plan calls for 132-bed Logan General to join not-for-profit Genesis Healthcare, a three hospital system in nearby Huntington, W.Va. In return, Genesis will guarantee an $18 million loan to Logan General. Logan General's other hospital, 15-bed Guyan Valley Hospital, will also join Genesis.
Logan General is selling a strip mall-owned by the hospital's parent company and developed during Morrison's tenure-to help erase the hospital's debt.
Logan General filed for Chapter 11 protection in October 1998 (Oct. 26, 1998, p. 30).
Officials have said the hospital owed $65.7 million, but Senker said the hospital is on the mend, reporting a net loss of $9.6 million in 1999 on net operating revenue of $73.8 million. Much of the loss was associated with corporate organizations linked to the hospital's parent corporation, not to hospital operations, he said.