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Hedge fund bids for St. Alexius Hospital; Employees nervous

Hedge fund bids for St. Alexius Hospital; Employees nervous

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Financial shortcomings leave future of St. Alexius uncertain

Afternoon traffic rolls by outside of the St. Alexius Hospital on South Broadway on Tuesday, Jan. 28, 2020, in St. Louis. The hospital filed for bankruptcy in December, delaying payroll for its employees. Photo by Lexi Browning, lbrowning@post-dispatch.com

ST. LOUIS — St. Alexius Hospital, a south St. Louis institution that has been bought multiple times in the past decade, is moving closer to yet another sale.

The trustee running the 190-bed hospital that serves a low-income community has been working with an investment banker to market the hospital’s assets, according to court documents. Last week, a hedge fund made a $47 million bid for the company that runs the hospital.

Employees are nervous about private, for-profit buyers.

“The neighborhood needs somebody that actually cares about the patients and not profits,” said Rebecca Haase, who works in the emergency department. She wants the hospital to be purchased by a reputable nonprofit.

Haase said employees are exhausted by the hospital’s ongoing struggles. The air conditioning system that cools the emergency department, she said Thursday, has been broken for weeks.

Carol Fox, a principal at the financial advisory firm GlassRatner Advisory and Capital Group and the trustee for Americore’s case, said in an email Friday that the parts for the repair were ordered and paid for on June 4, and they will be installed promptly when they arrive. She added on Monday that the unit was serviced over the weekend and was operating.

A sale in a Chapter 11 bankruptcy case can happen very quickly, said Daniel Doyle, a lawyer at Lashly & Baer in St. Louis. The entire process can be as short as 40 to 60 days, if it is carried out efficiently. But the trustee could also extend the process if she decides that waiting longer would lead to better bids.

Any number of groups could bid, from a healthcare chain or a group of doctors, to a for-profit group of investors who see a need for healthcare in that neighborhood, he said.

“It could be any number of people who see some sort of opportunity for that facility,” Doyle said.

St. Alexius Hospital has struggled financially, with negative profit margins in 2015, 2016 and 2017, according to the most recent data from the St. Louis Area Business Health Coalition. It serves a high percentage of uninsured patients, and patients on Medicare and Medicaid.

In 2018 the hospital’s former owner, Florida-based Promise Healthcare Group, filed for bankruptcy. In January 2019, the bankruptcy court authorized a sale of Promise’s ownership stake to hospital management company Americore Holdings.

In December, less than a year after buying the hospital, Americore Holdings filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court for the Eastern District of Kentucky.

The court approved the trustee, Fox, to take over running Americore.

Fox’s attorneys wrote in a court filing that a sale will benefit all of the hospital’s stakeholders and “ensure that St. Alexius Hospital continues to serve as a healthcare provider in the local community.”

Fox said June 29 will be the deadline for bids.

Last week, one of Americore’s lenders — The Third Friday Total Return Fund — submitted a proposal to consolidate Americore’s assets and take ownership, according to court documents. The proposed purchase price includes $22 million in cash and a $25 million credit bid.

Third Friday’s principal officer, Michael Lewitt, declined to comment on the proposal. Bradley Shraiberg, an attorney representing The Third Friday Total Return Fund in the case, said the company feels that the plan will allow all of the Americore hospitals, including St. Alexius, to reorganize and put proper management in place.

The main hospital is located at 3933 South Broadway. The hospital also has the Lutheran School of Nursing, located near the intersection of Miami Street and Jefferson Avenue.

The Missouri State Board of Nursing considered shutting down the nursing school after a review found high employee turnover, financial issues and outdated facilities. The school’s pass rate on the National Council Licensure Examination had dipped to 79% in 2015 and 78% in 2016, below the 80% rate required for registered professional nursing schools.

The issue was postponed due to the COVID-19 pandemic, said Raishelle Willis, the school’s interim program administrator.

Willis said she hopes that a new buyer will offer a stronger financial foundation for the school. If the hospital was bought by a nonprofit, Willis said, the hospital and the school would become eligible for different types of grants and aid.

The school has been unable to admit new students since January. Willis is hoping that the moratorium on admissions will be lifted in August so the school can admit a new cohort.

“We all just hope and pray that we get someone that has good intentions for the hospital and for the nursing school. Someone that is financially stable,” Willis said.

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