The Times West Virginian

Local News

July 4, 2014

FGH one step closer to completing sale

Order signed by bankruptcy judge

FAIRMONT — Fairmont General Hospital moved one step closer to completing its sale to Alecto Healthcare Services Tuesday, when U.S. Bankruptcy Judge Patrick Flatley signed an order authorizing the sale.

“We’re very delighted to be actually partnering with Alecto Healthcare Services,” Peggy Coster, FGH president and CEO, said. “It means a lot for the city, the county, the community in general and the 700 employees of the hospital, so we’re very anxious to get started.

“And we’re looking forward to some great changes coming down the road.”

FGH will be sold for $15.3 million. $15 million will be due at the close of the sale, with an additional $300,000 due a year later.

FGH filed the motion to sell the FGH assets to Alecto on May 9. On May 20, the court approved the bidding procedures and sales process. A deadline for qualified bids was set for June 12 at noon.

Because no qualified bids were received by the deadline, the scheduled auction was canceled, and a sales hearing was held June 23 in Wheeling.

By the time of the sales hearing, court documents indicate that the limited objections that had been filed to the sales motion, with the exception of a motion filed by the U.S. Department of Health and Human Services (HHS), were resolved satisfactorily, so the sale could move forward.

When the sale is closed, according to bankruptcy code, the sale will be free of any “liens, claims, interests or encumbrances.”

This proved concerning for HHS. The West Virginia Department of Health, Bureau of Medical Services filed a claim of over $5.4 million in obligations owed by FGH for obligations from its Medicaid Provider Agreement. The claim was resolved for $216,000 from FGH.

At the close of the sale, Alecto will assume FGH’s Medicaid Provider Agreement. It will also assume FGH’s Medicare agreement, to receive payment for services provided to Medicare beneficiaries. According to the asset purchase agreement, Medicare payments to Alecto may be adjusted to deal with previous over or underpayments that could be from cost periods before or after the sale.

FGH filed for Chapter 11 bankruptcy Sept. 3, 2013. After filing for Chapter 11 bankruptcy in September 2013, FGH explored other partnership and restructuring strategies, and identified Alecto as a potential strategic partner.

The case is being heard in the U.S. Bankruptcy Court for the Northern District of West Virginia.

FGH has operated as an independent non-profit since 1985. The purchase of FGH by Alecto will make the hospital a for-profit operation.

According to a document filed May 9, the hospital first “began to experience recurring operating losses and cash flow concerns” in 2008.

Email Colleen S. Good at cgood@timeswv.com or follow her on Twitter @CSGoodTWV.

 

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