Some physician-owned companies have gone broke operating just one hospital. But a new doctor-owned enterprise in El Paso, Texas, is making an ambitious attempt to run two.
The doctors, operating under the name Pan American General, are trying to revive one bankrupt hospital while also building a brand-new facility. They're committing a total of about $30 million to both projects, saying they want an alternative to national chains Tenet Healthcare Corp. and HCA, which run the city's four other private general acute-care hospitals.
The partnership was formed by about 35 physicians and other private investors to build a 60-bed hospital in El Paso, said Ernie Domenech, who was hired to be the administrator. Construction on the new hospital, which will be called Pan American General, is estimated to start in early 2002 at an estimated cost of about $25 million, he said.
A second opportunity arose after Southwestern General Hospital in El Paso filed for Chapter 11 bankruptcy in March. Pan American General snapped it up in a deal that closed in late June.
Proceeds of the $4.5 million sale, which included cash and the assumption of debt, will be used to pay some creditors but won't cover all of the hospital's debt, said Bernard Given, an El Paso lawyer who is handling the bankruptcy case. Given said a liquidation plan is expected to win court approval by late August.
Earlier this year, Southwestern General estimated in court documents that it had assets of $10.8 million and debts of $9.1 million, according to a report in the El Paso Times. Given declined to confirm those numbers last week.
Southwestern General began to lose money in 1999, when it posted a loss of $1.3 million, according to Solucient, an Evanston, Ill.-based healthcare information firm. Revenue was $17.3 million. Data for 2000 were not available, although management said the hospital lost money last year. Given said he could not comment on why the hospital lost money, and former managers could not be reached.
Southwestern General is at least the fourth physician-owned hospital to declare bankruptcy since July 1999. The three others-Columbus (Ohio) Community Hospital, Doctors Hospital of Hyde Park in Chicago and Precedent Health Center in Denver-all shut their doors.
Domenech said the new physician owners are upbeat about their chances of success. He said both of their hospitals will cater to citizens of Mexico, who already make up about a quarter of Southwestern General's patients. Both Southwestern General and the new facility are within two miles of border crossings, he said.
Southwestern General's new management is working to regain the confidence of physicians and patients after it temporarily stopped admitting patients in February, Domenech said. He said the owners intend to invest about $1 million to upgrade equipment in the next year. The hospital is staffing 35 beds, he said.
The new owners also are banking on the sentimental appeal of the 75-year-old building, Domenech said.