LRGHealthcare, which includes hospitals in Laconia and Franklin, filed for Chapter 11 bankruptcy on Oct. 19 as it tries to strike a deal to be acquired by Concord Hospital.
“As we move through this process, it is important to note that nothing changes for LRGHealthcare patients or employees. Our doors will remain open,” stated Kevin Donovan (pictured), president and CEO, on LRGH’s website. “This legal and regulatory process will play out in the courts and not in the walls of our hospitals.”
LRGHealthcare has received an offer from Concord Hospital to potentially acquire Lakes Region General Hospital, Franklin Regional Hospital and the hospitals’ ambulatory sites.
In an interview earlier this year, Donovan said LRGH, which has been in business for 125 years, was looking for a potential partner but that was challenging due to LRGH’s heavy debt load. LRGHealthcare borrowed $143 million in 2009 and still owes $110 million. “That’s two to three times the debt load organizations of our size should have,” said Donovan, who took the reins in 2016.
That debt put LRGHealthcare on shaky financial ground even before the pandemic and after years of operating losses. It posted a $13.3 million loss in FY2018 and in FY 2019, the system lost about $1 million per month, Donovan said. When the pandemic hit in March, LRGHealthcare had less than five days of cash on hand, he said.
The loss of elective surgeries in the initial months of the pandemic only added to the financial strain, reducing LRGH’s revenue by 62%, according to Donovan, explaining LRGH lost $5 million in March and $6 million in April. In response, LRGH furloughed 42% of its 1,300 employees to reduce losses, which would have doubled otherwise.
LRGH received a one-time $5.25 million loan from the governor’s emergency relief fund, which helped to keep the doors open. It also received $15 million in federal aid. However, LRGH’s weekly expenses total $4 million.
“We can no longer settle for making ends meet, and our current situation is not sustainable for the long term. By filing for bankruptcy, LRGHealthcare can maximize the value of our assets and ensure the Lakes and Three Rivers region continues to have access to high-quality health care services,” LRGH stated on its web site. “It has become clear that we must first move through the procedural step of bankruptcy. As part of that process, Concord has submitted an offer to purchase our assets.”
There are several steps LRGH must go through before an acquisition is finalized. “The United States Bankruptcy Court will conduct an auction and sale process, and other potential buyers will have an opportunity to submit offers to acquire LRGHealthcare’s assets,” the system’s website stated. It also requires further approval from regulatory agencies, including the NH Attorney General and Department of Health and Human Services.
“If the courts and regulators accept Concord’s offer and the Concord Hospital board moves forward with the proposed acquisition, Lakes Region General Hospital, Franklin Regional Hospital and the Hospitals’ ambulatory sites would become part of the Concord system once review by the New Hampshire Attorney General and Department of Health and Human Services is complete,” LRGH stated on its web site. “We expect that this process will continue through the calendar year and perhaps into 2021.”
LRGHealthcare is hosting a virtual community forum on Oct. 29 from 5:30 to 6:15 p.m. The deadline for filing claims against LRGH has yet to be established by the Bankruptcy Court. LRGHealthcare is being represented by Nixon Peabody and is also being advised by Deloitte Transactions and Business Analytics.