New Hampshire-based Concord Hospital has been given the green light on its $30 million acquisition of LRGHealthcare, a two-hospital health system that filed for bankruptcy in October 2020.
Judge Michael Fagone submitted the approval to the U.S. Bankruptcy Court District of New Hampshire's docket on December 24.
As a part of the deal, Concord Hospital will acquire the assets of Lakes Region General Hospital, Franklin Regional Hospital and the hospitals' ambulatory sites. The order refers to the hospitals by their new names, Concord Hospital-Laconia and Concord Hospital-Franklin.
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Concord was the only bidder to submit an offer by the court's deadline, Kevin Donovan, the LRGHealthcare president and CEO said in a statement.
"While LRGHealthcare received significant interest from other parties, no other party submitted a bid by the deadline," he said. "We have always felt that Concord Hospital is a natural fit to ensure the continued provision of excellent care in the Lakes and Three Rivers Region, and we are excited about this step forward."
The next steps in the process will be seeking approval from regulatory agencies, including the New Hampshire Attorney General's office and the New Hampshire Department of Health and Human Services. The deal is expected to close in 2021.
WHY THIS MATTERS
In LRGHealthcare's October bankruptcy filing, the health system said it had been in "a precarious financial state for the past several years," despite measures it took to cut costs and generate revenue.
The "tumultuous five to ten years" began when the health system began investing in more inpatient services despite trends of increasing outpatient facility usage, it said in the filing. The health system also attributed the implementation of a "massively expensive" electronic medical record system, which ended up taking 9% of the system's annual revenue, to its financial struggles.
By the time it released its 2019 Annual Report, LRGHealthcare had accumulated more than $111 million in long-term debt.
THE LARGER TREND
Across the country, hospitals are in dire financial trouble due in large part to the COVID-19 pandemic.
November's median hospital operating margin came in at 2.5% year-to-date with the Coronavirus Aid, Relief, and Economic Security Act funds and -1.1% without them, according to Kaufman Hall's December Flash Report. Gross operating revenue, without factoring in CARES, fell 3.8% year-to-date, but was up 4.2% year-over-year. Still it fell 2.3% below budget. The total expense per adjusted discharge rose 14% year-to-date and 17.3% year-over-year.
Despite the hope provided by the start of COVID-19 vaccine distributions, experts at Kaufman Hall still fear for months ahead as hospitals combat the continued spread of the virus with limited resources and capacity issues.
ON THE RECORD
"Our goal in acquiring the two Lakes Region hospitals is to build a sustainable health system in the region," said Robert Steigmeyer, president and CEO of Concord Hospital, in a statement to The Laconia Daily Sun. "Lakes Region communities need access to local health care and our intent is to keep services in the communities and accessible to all."
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