Brotman Medical Center is cool to suitor Prime Healthcare
The Culver City hospital says it worries about the chain's business practices.
There is no For Sale sign on the front lawn of Brotman Medical Center in Culver City. But a behind-the-scenes drama is unfolding that could determine the financially troubled hospital's future and what kind of care may be offered to patients on the Westside.
Brotman filed for bankruptcy protection in the fall, and its financial condition continues to look bleak. It has been searching for buyers willing to help pay off its large debt and invest in its aging buildings and equipment.
Leading the list of potential suitors is a fast-growing hospital chain, Victorville, Calif.-based Prime Healthcare Services Inc. The company calls itself a rescuer of troubled hospitals and says state and federal data show that its nine medical centers provide high-quality medical care and more charity care than many of its competitors.
Brotman Medical: An April 17 article in Business about Brotman Medical Center in Culver City and interested buyer Prime Healthcare Services Inc. misstated the status of a pending sale of another hospital Prime once sought to buy. The article said that Anaheim Memorial Medical Center had been sold to another party. That sale must still be approved by the California attorney general before it can be finalized.
Nonetheless, Brotman executives say they spurned Prime's overtures because they are worried about some of its business practices, which include cutting hospital services and canceling private insurance contracts.
Because of such practices, patients at Prime hospitals seek care elsewhere at a time when more hospitals in the region are closing or cutting back services.
Stan Otake, Brotman's chief executive, said the hospital had trimmed costs and services in recent months and now makes money on daily operations. "We're starting to turn things around," he said.
It may not be soon enough. Early this month, Prime bought $18 million of Brotman's loans from its primary lender. The hospital owes millions of dollars to creditors, medical suppliers and food service providers.
Brotman executives say another party is interested in buying the hospital and wants to keep the current management team in place. They hope the deal can close in the next few weeks.
If that doesn't occur and the hospital can't pay its debts, however, the Bankruptcy Court could decide that it should be sold through a public auction, and that could come within the next several weeks, hospital executives said.
Although anyone could bid, Prime would be in a strong position to acquire the facility because the loan the company recently purchased has most of the hospital's assets attached as collateral, according to bankruptcy attorneys.
J. Scott Bovitz, a Los Angeles bankruptcy attorney who is not involved in the deal, believes that Prime is doing "what we like to call a loan-to-own play. They have only two options: They happily make a big return or they get the assets."
