Doctors to secure hospital ownership
Times have undoubtedly been hard for the owners of Troy Regional Medical Center, but investor Gil McKenzie said that may soon change.
After a group of 14 doctors and McKenzie purchased the hospital a little more than a year ago, they have struggled since to find the finances to secure ownership. But, McKenzie said within the next two weeks, the Doctors Group should have all that put behind them.
“We have projected that for this fiscal year, we show us getting in the black this summer and staying in the black,” McKenzie said.
But, this turn around won’t come without the help of a sizable loan.
Within the next two weeks, McKenzie said he expects a loan to finalize in the doctor’s names with a price tag of $2 to $3 million.
“It’s more than what we think we’ll need, but it’s better to be safe than sorry,” McKenzie said.
The decision to borrow money comes after the hospital had to defer payroll two weeks ago and a month after the doctors asked the city to delay taking ownership.
McKenzie said though the loans are not secured yet, he expects the doctors will continue ownership indefinitely.
“We don’t believe we’ll be taking the city up on this offer,” McKenzie said. “We believe we’ll be ready.”
Still, McKenzie said the owners would ask the city to defer once again their agreement to secure their finances in the event they need support.
The original deferment was after the owners chose not to ask the city to take over the hospital bonds on Jan. 31 and asked them instead to keep that an option at least until March 31.
While McKenzie said he thinks the doctors will be secure, the city support will guarantee their loans and give them extra cushion.
“The fact the city has agreed to do that gives the bank the assurance there’s a take out,” McKenzie said. “The bank knows if for some reason we needed the city to step in and buy the real estate for $10 million, they would do that.”
McKenzie said while the loan process may seem to take a long time, it actually is something the doctors have been working diligently to secure.
“It may seem like a long time, but when you’re talking about $2 to $3 million in loans with banks in today’s economy, it’s really not that long,” McKenzie said.
After the doctors took the hospital over from Attentis Health Care, who lost about $4 million a year, McKenzie said they have been working to turn it around but based on figures the failing group had left behind.
“We were not able to predict the total amount of shortfall on the front end, mainly because we were using numbers from Attentis,” McKenzie said.
Now, the group has compiled volume projections of their own, and he predicts the hospital will not fall short in terms of funding again. But the increased debt the owners will incur comes on top of approximately $3 million they inherited from Attentis and another $10 million for the hospital property itself.
By the end of this month, McKenzie said doctors will know for certain whether they will secure finances and continue under the same ownership.