After filing for bankruptcy, Florida-based Promise Healthcare Group is looking to sell Promise Hospital in northwest Dallas, the Dallas Business Journal reports. The move is part of larger effort to sell 16 hospitals from California to Mississippi.
In November, the hospital company and 46 related businesses filed for bankruptcy in Delaware, with more than $565 million in debt, according to the DBJ. Then on January 1, a motion was filed to auction off Promise Hospital of Dallas and 12 other facilities.
The company’s website says it employs about 2,000 people at 14 hospitals and two nursing facilities stretching from Miami to Los Angeles.
Andrew Hinkelman, chief restructuring officer and interim CFO of Promise Healthcare Group, said in bankruptcy court documents, “While I believe that the Debtors’ overall business is fundamentally strong, the Debtors have been operating with an unsustainable balance sheet due to current industry dynamics and certain underperforming facilities within the Debtors’ portfolio.”
Becker’s Hospital Review reports that the financial woes were due to Medicare reimbursement changes that caused revenue to fall. “When rates declined sharply, the Debtors were unable to adjust operating cost structures at the facilities, leading to a direct impact on profitability,” Hinkleman told Becker’s.
The Promise chain has experienced numerous scandals in its 15-year history. It began when Founding Partners Capital Management purchased several hospitals in 2003, but when the properties were placed in receivership by the Security and Exchange Commission, fund manager Robert Hager attempted to clear $145,000 out of the accounts of Founding Partners. He later committed suicide three days before a 2009 hearing regarding his attempts to take the money, according to Bermuda’s The Royal Gazette.
Sonny Ramdeo, a payroll manager for Promise Healthcare, was convicted of stealing $20 million from the company in 2015, landing him in prison for 20 years, according to The Palm Beach Post.
Despite the scandals, the Dallas Morning News reported that the hospital would stay open even after the bankruptcy filing. “We do not expect substantial changes for our physicians, employees and patients, nor any interruption of care at any of our facilities,” hospital officials told the news in a statement to DMN.
The U.S. government filed a motion on January 2 to stay the case because lawyers for multiple federal agencies that will be working on the case are out of work due to the government shutdown.
The hospital has not responded as to whether the upcoming auction will impact its operation moving forward.