Westerly — A for-profit New Jersey hospital management company that specializes in acquiring financially troubled hospitals has submitted an official letter of intent to purchase The Westerly Hospital.
Westerly Hospital Holdco, a limited liability company, announced its offer Thursday. It has also made a separate offer under an affiliated company, NS Healthcare Holdco, to enter into a lease-purchase agreement for the North Stonington Health Center.
The health center was opened by Westerly Hospital a year ago but has sharply curtailed services since the hospital entered receivership in December.
In a statement, Westerly Hospital Holdco said it has a track record of working with communities to save acute-care hospitals in financial distress. It said it would keep the hospital open as an independent community hospital for a minimum of 10 years, maintain services, expand into new ones and improve the quality of care.
Both companies are affiliated with IJKG Opco, a hospital management company based in Bayonne, N.J. The company owns Hoboken University Medical Center and Bayonne Medical Center and has recently been approved by a bankruptcy judge to purchase Christ Hospital in Jersey City. The purchase is pending approval from the New Jersey Department of Health.
All three hospitals were, like Westerly Hospital, financially troubled when IJKG sought to take them over and turn them into for-profit companies. Vivek Garipalli, a principal in the company, could not be reached for comment Thursday.
Lawrence & Memorial Hospital in New London has also submitted a nonbinding offer to purchase some or all of the assets of the financially troubled hospital. Both L&M and The Westerly Hospital are nonprofit.
L&M spokesman Mike O'Farrell said the New London hospital had no comment on the rival offer for The Westerly Hospital.
Attorney Mark Russo, the court-appointed special master for The Westerly Hospital's receivership proceedings, could not be reached for comment Thursday. He is scheduled to be in Washington County Superior Court on Monday for Judge Brian Stern's decision on whether to approve the offer from NS Healthcare Holdco for the North Stonington facility. Washington Trust, the hospital's largest creditor, has filed an objection.
There is also a court proceeding scheduled for April 27 in which Stern will consider a petition from Blue Cross & Blue Shield of Rhode Island to compel payment from the hospital for $75,632 in employee health insurance premiums.
Westerly Town Manager Steven Hartford, a member of the Westerly Hospital Area Residents Committee, said six hospital entities have shown interest in The Westerly Hospital, but thus far only L&M and the New Jersey company have submitted preliminary offers. The 11-member committee, which includes three hospital physicians, local business and financial professionals, the president of the nurses' union, attorneys and others, was formed by the judge to provide community input into pending decisions about the hospital's future.
"We are still committed to looking for a way to keep the hospital independent," Hartford said. "But if not, we'd like to find a partnership to ensure that it remains a community asset and that the community has some say in its future. We will be very carefully looking at a for-profit proposal. We're concerned about a for-profit, but we're not ruling anything out."
Dr. George Bourganos, president of the hospital's medical staff, said he remains confident that the hospital can become a viable institution again. The best proposal, he said, will not hinge on whether the new owner is a for-profit or nonprofit company, but "which one is going to make it a good, strong hospital that's going to stay as a hospital." He also noted that the hospital is the town's largest employer, so its success is critical both to the local economy as well as health care.
He expects there will be more offers made.
"There's been little doubt there would be a lot of interest," he said. "It's a good hospital in a good area, and it can be successful."
Westerly Hospital voluntarily entered receivership in December after ending fiscal 2011 with a $5.7 million operating deficit — the latest of several years of deficits — and insufficient cash to continue operations without legal protection from creditors.