Hospital emerges out of Chapter 11 bankruptcy

DOWNEY -- Downey Regional Medical Center has emerged from Chapter 11 bankruptcy after securing $52 million in loans, the hospital announced Wednesday.Under its bankruptcy exit plan, Downey Regional issued $32 million in new taxable bonds through the Independent Cities Financing Authority and entered into a $20 million deal with Midcap Financial LLC. According to its website, Midcap Financial offers "debt solutions to middle market healthcare companies." Downey Regional filed for Chapter 11 bankruptcy protection in September 2009, citing financial systems breakdowns and poor contracts. The hospital restructured its contracts and made "significant improvements" to its financial systems, hospital officials said in a statement. A court approved Downey Regional's reorganization plan on Feb. 16, with the exit financing closing Wednesday. The city of Downey, which owns the land Downey Regional is located on, agreed last month to put the property up as collateral to help the hospital secure financing. Downey Regional executives called the hospital's emergence from bankruptcy a "success story." "Downey Regional Medical Center's recovery is a success story almost without parallel," said hospital CEO and president Kenneth Strople. "Hospitals don't usually survive bankruptcy intact, let alone unaffiliated, let alone during a severe national recession and an economy that did not support viable capital markets. "We are especially proud that during our reorganization, we were able to continue normal business operations, including the emergency room and provide excellent patient care to our community," Strople added. While the hospital was in bankruptcy, it paid more than $17 million to creditors while managing to still open a new catheterization laboratory and acquire new chemistry machines and digital mammography technology. "With new health care contracts in place and our financial house in order, the hospital management team is very excited about the future, even as we face the uncertainty of the future and challenges in healthcare," Strople said. "We have transformed our hospital operations and have emerged as a stronger, healthier and more competitive community healthcare provider. "We are very proud of everything we have accomplished and are looking forward to making more exciting announcements in the near future," Strople said.

********** Published: March 08, 2012 - Volume 10 - Issue 47