CLARKSVILLE —
Kentuckiana Medical Center has finalized a deal with Michigan-based health care investors Granger Group.
Dr. Eli Hallal, a key local investor in the hospital, said the plan will be enough to finish construction of the hospital and take it out of bankruptcy. The financial restructuring plan is valued at about $40 million, according to Granger Group. It was accepted this week by United States Bankruptcy Court Southern District of New Albany.
Kentuckiana Medical Center, which employs close to 200 people, is located just off U.S. 31 in Clarksville. It opened in 2009 and has remained in business as officials have attempted to restructure debt after filing for Chapter 11 bankruptcy protection in September 2010.
Earlier this year, government-backed land deals had been discussed as a means of rescuing the hospital from bankruptcy. That talked slowed down after the Clark County Commissioners and the Clarksville Town Council each rejected such proposals.
“I think it’s very good they were able to resolve the issue within the private sector,” said Clarksville Town Council President John Gilkey upon receiving news of the Granger deal. “We’re looking forward to working with them on the development.”
In lieu of an interview, Granger issued a press release after a reporter called Friday afternoon.
The release said the company began meeting with leadership at the medical center in January.
“The plan, as approved yesterday in court, will allow [Kentuckiana Medical Center] to continue serving the surrounding community with quality of care that outperforms other hospitals in the area,” the release said. “The story behind KMC’s physicians and staff spurred Granger Group’s passion to provide a structure that will allow KMC to continue to serve its patients and deliver the high-quality of care that is expected in the health care industry.”
The release goes on to say that Granger, through a newly formed entity, will assume the management responsibilities of the hospital’s operations.
Kentuckiana Medical Center is a partnership of CHA, a hospital development company based in Wichita, Kan., and Kentuckiana Investors, a group of 33 local physicians. The one-story, 76,000-square-foot complex was to be a $46 million construction project when it got started. However, Hallal has said economic turbulence in 2008 and 2009 kept the hospital under capitalized, and therefore, unfinished when it was started.
First Tennessee Bank, one of its creditors, froze its assets in September 2010, which precipitated the hospital’s chapter 11 bankruptcy filing. Chapter 11 bankruptcy protection provides for reorganization while a business stays open and pays creditors over time.
Granger’s release said that in the next four months more than $10 million of new capital will be invested in the hospital to meet the requirements of the bankruptcy plan.
“It would have been easy to throw in the towel and walk away,” Hallal said Friday.
That didn’t happen because the physicians who’d invested in it knew it was “a good project.”
Though the government-backed deals were rejected, the hospital is not without some public investment. Clarksville invested about $1.2 million in infrastructure improvements around the hospital, including roads, curbing and even a $41,000 storage tank to handle waste from the hospital’s decontamination room.
David M. Cantor, Kentuckiana Medical Center’s attorney through the bankruptcy process, was called for this story but could not be reached by press time.
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A $40 million deal was made between Kentuckiana Medical Center and a Michigan investment group that will finish construction and take it out of bankruptcy. File photo
Discussion
June 1, 2012
$40M deal done to help medical center
Construction would be completed as Clarksville hospital expected to emerge from bankruptcy
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