Posted: Wednesday, April 15, 2009
Brotman Medical Center emerges from Chapter 11 bankruptcy protection
The Culver City hospital gets a big assist from the Jewish Home for the Aging, which lent $23 million in exchange for an option to buy land for a senior living facility.
Brotman Medical Center in Culver City, with the help of the Jewish Home for the Aging, emerged from bankruptcy protection Tuesday in a way that may result in a new senior living facility on the Westside.
The 420-bed hospital said it returned to profitability after securing $29 million in financing, including $23 million in loans from the Jewish home.
In exchange, the Jewish home -- the single largest provider of senior housing in Los Angeles -- received an option to buy land next to and owned by the hospital for the possible construction of a senior living facility. If the Jewish home exercises its option, it will cancel $16 million of Brotman's debt.
The financial turnaround will allow Brotman to continue providing inpatient and outpatient acute-care services and to keep its 24-hour emergency room open, officials said.
"This is more than a financial success story," Brotman Chief Executive Stan Otake said in a statement. "The importance of access to quality healthcare on a community's ability to grow and prosper cannot be understated. . . . During a time when community hospitals are rapidly disappearing, Brotman's survival and positive outlook are sources of much pride for all of us."
Brotman sits on prime real estate near Sony Pictures Studios. But it began losing money in 2001 as more patients went to nearby hospitals such as UCLA Medical Center and reimbursements from private insurers fell.
A subsidiary of Tenet Healthcare Corp., one of the nation's largest hospital chains, sold Brotman in 2005 for $27 million to a group that included staff physicians, a subsidiary of Prospect Medical Holdings Inc. and private investors.
In 2007, with an annual loss of $12 million, the hospital filed for bankruptcy protection and said it planned to remain open and reorganize.
Prospect, which operates five community hospitals in the Los Angeles area and manages a network of 14,000 physicians, led the reorganization and increased its ownership from 33% to 72% in exchange for an additional investment of $1.8 million. It is expected to invest an additional $700,000 within six months.
Brotman said in a statement that, after nonrecurring restructuring costs, it had operated profitably for much of the 18-month reorganization period.
Article By: Lisa Girion of the Los Angeles Times