By M. Scot Carter
OKLAHOMA CITY — A hearing is scheduled for 11 a.m. Monday in Oklahoma City federal bankruptcy court, which is expected to decide the fate of the beleaguered Moore Medical Center.
At that hearing, set to take place in front of federal bankruptcy judge T.M. Weaver, hospital administrators, creditors, attorneys and potential buyers will attempt to sell the bankrupt facility to Oklahoma City’s Integris Health.
Currently, Integris — which owns Baptist Medical Center, Southwest Medical Center and several other hospitals in Oklahoma — is the top bidder for the facility with a $32 million cash proposal on the table.
However, three protests to that offer have been filed with the court.
On Feb. 21, officials with Norman Regional Healthcare System and Dr. Rajesh Narula, managing member of Moore Health Services LLC, both filed objections to the Integris bid.
Both companies said they plan to make “higher and better” offers than Integris’. Sale procedures established by the court allow last minute offers to be made during the hearing.
The sale comes just days before the 45-bed acute care facility exhausts its $7 million line of credit.
Financial documents filed by the hospital show that its post-bankruptcy revenue is “insufficient to allow the debtor (the hospital) to operate after the planned sale date of Feb. 28.”
According to the facility’s monthly operating report, total income for January was $2,488,496, while total expenses were $2,399,403; a difference of $89,093.
Additionally, the hospital has $404,153 in unpaid bills, a payroll (including taxes) of $1,210,701 for the month and is owed more than $17 million in medical claims.
Total debt stands $55 million; including $39 million to Capmark Finance, about $4 million to HCI Special Purpose Corp., another $4 to $5 million in unsecured debt and $7 million to Hall Financial for its post bankruptcy line-of-credit.
Built in 2005 and opened late that fall, the for-profit hospital never saw positive cashflow.
Constructed with a multimillion-dollar loan from a General Motors subsidiary, — Capmark Finance — and underwritten by a federal Housing and Urban Development (HUD), program designed to keep hospitals in rural areas, the 45-bed, state-of-the-art structure is the only acute care hospital located in Moore.
The hospital is about 70-percent owned — and managed — by The Schuster Group, an Oklahoma City healthcare company, which also declared bankruptcy last fall. Both The Schuster Group and the Moore hospital have spent four months in federal bankruptcy courts.
The race to sell the facility before it runs out of cash has been difficult, at best. In late January, Weaver urged all the parties involved to find common ground and consummate the facility’s sale before it ran out of cash.
“The debtor has had post-petition negative cash flow of more than $5 million to date,” Weaver wrote in a Jan. 28 order. “And negative cash flow of $7 million anticipated by Feb. 28; …it is by no means certain that (it) can obtain further DIP financing from Hall, once the $7 million commitment is fully used.”
Weaver’s prediction and the hospital’s latest financial statement both contradict a late January e-mail sent by Schuster Group CEO Michael Schuster to hospital employees.
In his e-mail, Schuster said the hospital would be able to operate through its sale; he also predicted officials would sell the facility.
“Well, for one thing we don’t think the hospital is going to run out of money,” he wrote. “And we do think the hospital will find a successful buyer. Regardless, the hospital has financing in place that originally was intended to carry the losses of the hospital through the end of February.”
Yet court documents paint a somewhat different picture and outline the facility’s precarious financial condition.
A Feb. 20 motion filed by the hospital urges the court to act quickly in approving the sale, and asks the court to allow a short-term advance from Capmark in order the keep the facility open.
“An immediate need exists for the debtor to obtain this additional postpetitiion debt in order to continue to operate the debtor’s hospital facility up to and including the sale date and to permit the debtor to efficiently wind-up administrative matters following the sale.”
However, in his Jan. 29 e-mail, Schuster continues to downplay the hospital’s shaky finances.
All of the parties involved want the facility to stay open, Schuster said. “I think everyone, including HUD and Capmark will do everything reasonably possible to make sure the hospital does not close...of course, things could change overnight, or next week or next month.”
Come Monday, the facility’s 350-plus employees will find out.
