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Southwest Regional Hospital – Georgetown, Ohio

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Southwest-RegionalOn Friday, September 26th, less than two weeks after Southwest Regional Medical Center in Georgetown, Ohio had office furniture and medical equipment repossessed and then returned by angry creditors Georgetown Emergency Group, hospital management announced to employees and the public alike that the facility would be closing its doors at end of the business day.

Though the announcement to close was given with short-notice, struggles with unpaid bills for services and equipment were nothing new for this 32-bed urgent care facility. A recent press release issued on behalf of Dr. Krishna Surapaneni, President and Chief Executive Officer at the time of closing, addressed the issue and focused on the weight of inherited debt. “Over $7 million in old debt has been retired over the past 4 years including more than $1 million paid on old debt over the past year. While most of the old debt has been retired, we are still working with a few old vendors on the last few debts. We have been fighting these same battles for years. Each of the vendors wants to be paid-in full first; some vendors have been more willing to set-up a payment plan than others.”

Much of this debt is the result of the hospital having repeatedly changed hands over the past few years. Formerly owned by Brown County and known as Brown County Hospital, the facility was sold by County Commissioners to Paul Tufts in 2011, under an agreement to assume nearly $10 million worth of vendor debts, leases and loans then owed by the hospital. Before its sale to Tufts, the hospital had been forced to cover nearly $6 million worth of unpaid treatment due to its standing as a non-profit hospital under county ownership. The following year, Tufts sold the hospital to Joan Phillips, who in turn sold it to Dr. Surapaneni, who took over as president and CEO in September 2013.

Prior to returning furniture and equipment, Georgetown Emergency Group reached an agreement with the hospital over collection of a $350,000 debt from a complaint filed in March 2013, which claimed that the hospital had not provided compensation for the use of emergency room employees between October 2012 and March 2013. But others were not so easily appeased.

Ultimately, Southwest Regional’s closing was in reaction to a judgment made last April against the hospital in favor of another creditor, CIT Group. In 2008, the medical center entered into two leases with CIT Group for medical equipment, including an MRI machine. Three years later, in May 2011, CIT Group “declared a default under the leases” due to the hospital’s “repeated failure to make the required monthly payments.”

On June 1, 2011, CIT Group and the hospital entered into a forbearance agreement, asserting that the hospital would make regular monthly payments of $25,000 for the first 12 months, for a total of $300,000. The hospital would then begin paying for the included medical equipment as dictated by their lease schedules in the amount of $30,000 per month. Unfortunately, Southwest Regional proved unable to live up to this agreement, thus forcing the CIT Group to file a lawsuit and repossess all equipment. Last minute negotiations proved insufficient.

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Posted: October 21, 2014

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Category: All, Lost Hospitals, Ohio

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