Hospital Reopening Plan Hits a Brickwall
HUD Now Auctioning Complex to the Highest Bidder, No Special Consideration Given to Group Trying to Reopen it as a Hospital
The efforts to reopen the shuttered St. Mark’s Medical Center in La Grange as a hospital took a big hit this week.
The medical center, which closed last October because of financial woes, will now be sold to the highest bidder by the federal government without special consideration for potential buyers who wanted to reopen the hospital.
Mississippi-based Progressive Health Group has, for the past few months, been trying to buy the facility to reopen the hospital but have now told St. Mark’s Chairman Dudley Piland that they are not interested in being a bidder in the Loan Sale but “they are certainly willing to consider operating the facility should the successful bidder want to open a hospital.”
Piland said he was “saddened and disheartened” at the recent developments, and shared the following updates: In a letter from the U.S. Department of Housing and Urban Development (HUD) dated July 18, 2024, HUD notified St. Mark’s Medical Center (SMMC) that, although HUD was aware that SMMC was pursuing an asset purchase sale with Progressive Health Group (“PHG”), “HUD has determined that a note sale is the most expedient process in which to maximize recovery to the FHA insurance fund.” Accordingly, HUD will not consider any other process.
“This decision effectively ends the attempt of PHG to acquire the property with the intent to reopen the facility as a Rural Emergency Hospital,” Piland said. “We would like to publicly acknowledge PHG’s good faith effort to acquire the hospital property and reopen St. Mark’s to serve our community. Unfortunately, with St. Mark’s having defaulted on its mortgage debt, this wasn’t a process we could control.
“As earlier reported, HUD was kept apprised of the discussions between SMMC and PHG regarding the asset sale. At the same time SMMC and PHG were aware that HUD was preparing to include the SMMC note in an upcoming note sale in the event the asset transaction proved unsuccessful or unacceptable.”
On July 16, 2024, HUD published a “Notice of HUDHeld Healthcare Loan Sale (HLS 2024-1)” in the Federal Register which reads, in part, “Notice of sale of sixteen (16) healthcare mortgage loans secured by 15 properties including one hospital.” As explained in this Notice, HUD selected a competitive auction as the process to sell these notes, including the SMMC note, as it optimizes HUD’s return on sale, affords the greatest opportunity for qualified bidders, and provides the most efficient process for HUD to dispose of the loans. The Notice generally describes the bid process and “certain persons who are ineligible to bid.” The sealed bid responding to the loan sale are due “on or about August 21, 2024”.
In the July 18 letter to SMMC, HUD specifically stated “Pursuant to Section G of Form HUD-90092, a Purchaser shall not have had access to information concerning the Mortgage Loans or provided services to any person or entity which, within such two-year period [prior to August 1, 2024], serviced, performed services for HUD or otherwise had access to information with respect to the Mortgage Loans”.
“So, PHG will not participate as a bidder in the Loan Sale,” Piland said. “However, PHG has indicated they are certainly willing to consider operating the facility should the successful bidder want to open a hospital. Unfortunately, it is unknown at this time what the successful bidder will do with the property.”