Pauls Valley, OK, Pauls Valley Democrat

Local News

March 4, 2013

St. Anthony decides against of purchase of PVGH

Debt restructure sought to save hospital — What at the end of the past year seemed a sure thing when it came to the sale of Pauls Valley General Hospital into the St. Anthony Health System family, is now no longer the case.

It was a change five weeks ago that left city of PV officials like Mayor Tim Gamble scrambling for a way to keep the situation at the community’s medical facility from spiraling out of control, all of which came days before what was expected to be the positive end of a due diligence process.

Far from continuing toward the final sale step at the beginning of February, instead contributed to Friday’s public hearing and announcement that the Hospital Authority would be filing for a Chapter 9 debt restructure.

“The authority and board had been in on negotiations for wording of the sale,” said Gamble, in an interview at the Democrat, noting how the city and authority hired attorneys to consider options on how to proceed with debt since purchase of the hospital was initially something that would have left the authority debt free.

“They feel confident under protections we’d be able to restructure and remain a viable entity.”

The urgency of the decision to file for Chapter 9, which is different from other forms of bankruptcy since it only seeks to reorganize debt as a way to pay it off more easily instead of debt being eliminated, was seen as the only course of action left since the authority cannot handle the financial strain as is.

It will provide the authority and city protections that will allow them to deal with creditors and determine which contracts need to be revisited or eliminated.

The primary form of financial strain that led to this action, as listed in a press release, rose out of call for payment from the authority’s largest creditor. The creditor provides a recently required as well as federally mandated electronic billing hardware/software and had threatened to prohibit further use.

As a result, the authority voted Friday to sign a Chapter 9 form through McDonald, McCann, MetCalf & Carwile out of Tulsa to the United States Bankruptcy Court for the District of Oklahoma.

Now the authority, acting as trustee with St. Anthony’s decision not to purchase PVGH, will take time to resolve the issue.

“The Chapter 9 filing will give us some breathing space to deal with this issue and allow us to reorganize without disruption of services to the community of Pauls Valley,” Gamble noted in the release.

“The hospital will continue to operate throughout the Chapter 9 process.”

Some of the other impacts of restructuring are already being felt through letters that have been sent to employees of the hospital that certain services will be cut.

The two biggest items on the block will be emergency surgery and obstetrics since they are at least currently resulting in revenue losses instead of gains.

However, Gamble wanted to make it clear that this means there will be a hospital here and one will remain as they explore options for the future.

He said the authority had the option of closing the hospital, but refused to accept that as a path since so many people rely on the medical care provided and its proximity to residents.

Gamble also wanted to point out they are still working with St. Anthony’s to identify all potential cost saving measures through their management agreement and the ultimate goal is to at least establish a neutral revenue stream sometime in the near future.

While it won’t be easy to overcome what is about a $200,000 a month dip in the red, he feels confident the moves will eventually lead to stability.

“Under this reorganization and restructuring we intend to achieve our goal,” said Gamble. “There will be a hospital.”

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