As the stalking horse bidder in the upcoming auction for bankrupt LRGHealthcare, Concord Hospital set the floor for the bidding and likely will have the inside track.
As LRGHealthcare filed with the U.S. Bankruptcy Court, Concord Hospital submitted a purchase and sale agreement reached by the two nonprofit corporations to purchase LRGH’s two hospitals — Lakes Region General Hospital and Franklin General Hospital — and its ambulatory centers for $30 million.
The filing followed two years of seeking a merger or sale during which LRGH approached 43 potential partners, but elicited just five non-binding expressions of interest. The most promising was from Concord Hospital. But, as the two neared agreement, negotiations were overtaken by the onset of the coronavirus pandemic.
Before the agreement, Robert Steigmeyer, president and CEO of Concord Hospital, said, “We spent a year doing the analysis” and the result was the realization that “bankruptcy provided the only path to resetting the debt.”
Executives at Concord Hospital ‘spent a year doing the analysis’ before making their offer for LRGHealthcare, says CEO
Robert Steigmeyer.
He added that “after doing our due diligence and reviewing LRGH’s financial condition, we believe together we can build a sustainable community health system.”
LRGH’s liabilities include a $111 million mortgage held by KeyBank, 95% of which is guaranteed by the U.S. Department of Housing and Urban Development, as well as unsecured debts of $5.25 million owed to the state of New Hampshire, $1.4 million to the Laconia Clinic and $764,000 to Eversource.
Steigmeyer said the geographical proximity of the two healthcare systems has fostered longstanding collaborative relationships between them. “We’ve had a cardiology unit in Laconia for years,” he said.
Steigmeyer declined to speculate on the outcome of the bankruptcy proceedings, which will include an auction overseen by the court as well as review by the charitable trust and antitrust divisions of the New Hampshire Attorney General’s Office. But, he emphasized, “be sure you think beyond the price.”
He explained that the purchase and sale agree-ment includes protecting and preserving LRGH’s pension plan, which is underfunded by at least $11 million, as well as its malpractice insurance.
“It’s not in the price,” he said. “It’s in the relationship. It’s part of the fabric of who we are.”
— MICHAEL KITCH
