The process of chipping off pieces of bankrupt New American Healthcare Corp. has begun, although there's a chance some current company officials will get to keep a chunk of the old block of hospitals.
A judge in the U.S. Bankruptcy Court in Nashville last week approved the sale of two of the Nashville-based company's eight hospitals for $32 million plus working capital to two separate bidders.
Early this week, two New American officials are expected to bid on five more of the company's hospitals and corporate assets, with the intent of staying in the current headquarters under the new name of Accord Healthcare.
If that bid or other potential competing bids are accepted on June 27 by U.S. Bankruptcy Judge Marian Harrison, New American will have only one hospital lacking interested buyers, 46-bed Memorial Hospital of Center (Texas).
New American filed for Chapter 11 bankruptcy protection last April, listing assets valued at $144.9 million and liabilities of $135.9 million (April 24, p. 6). The company was founded in 1995 by former HealthTrust executives, including Robert Martin, who resigned as chief executive officer in February 1999 and has since started his own hospital company (May 8, p. 3). New American started missing interest payments in December 1999, and in February the company was delisted from the New York Stock Exchange.
New American Chief Financial Officer Timothy Hill, 38, and Gene Wright, 51, a regional vice president, incorporated as Accord in February.
"The opportunity presented itself when New American made the decision (about the bankruptcy), or when we felt New American would make this decision, and the idea and the opportunity kind of came together at that point," Wright said.
Wright said Accord has arranged for equity and debt financing, but he declined to disclose details.
Accord is bidding $12.5 million plus working capital for 123-bed Woodland Park Hospital in Portland, Ore.; 77-bed Eastmoreland Hospital, also in Portland; 49-bed Dolly Vinsant Memorial Hospital in San Benito, Texas; 146-bed Puget Sound Hospital in Tacoma, Wash.; and 155-bed Memorial Hospital of Adel (Ga.). The bid also covers New American's corporate assets in its headquarters, which the company leases, according to bankruptcy filings.
Last week, Brentwood. Tenn.-based LifePoint Hospitals bid $29.75 million plus working capital for New American's 102-bed Lander (Wyo.) Valley Medical Center. And Picayune (Miss.) Clinic, a group of physicians, bid $2.2 million plus working capital for 71-bed Crosby Memorial Hospital in Picayune. The judge accepted both bids, which taken together exceeded by about $6 million a bid by Brentwood-based Province Healthcare Co. for both hospitals, said Craig Gabbert, New American's attorney.
"It's a good outcome for a lot of the constituencies; the patients, the doctors, the employees, it's a wonderful outcome for them," Gabbert said. "The banks, needless to say, will not get all of their money, and there will be other creditors who will not get all their money."