The Decatur Hospital Authority board – the body that governs Wise Regional Health System – in a special meeting Monday night authorized the sale of $19 million in bonds to purchase the assets of North Texas Community Hospital.
Wise Regional is buying the Bridgeport hospital out of bankruptcy after emerging as the only bidder. A federal judge approved the sale to Wise Regional during a brief hearing on Feb. 4 in Fort Worth.
Monday, the Decatur-based hospital system secured the funding to make the transition sometime in March – subject to approval from the Texas Attorney General’s office.
“It could be as early as March 5 or as late as the end of March under our purchase agreement,” said Steve Summers, CEO of Wise Regional Health System. “As long as we have everything in place, we’re fine. We want to be ready to assume operations as soon as we close the deal.”
The Series 2013A bonds approved by the DHA board, along with the schedule of debt service and uses of the funds, will not be sold on the open market. They will instead be issued to the holders of the nearly $60 million in bonds used to build the now-bankrupt hospital.
The tax-free bonds have an average interest rate of 6.5 percent – “about normal in the market right now” according to Summers.
“It’s an unrated bond issue,” he said.
The action will ramp up Wise Regional’s debt service from $4.8 million to $5.4 million this year and from $7.8 million next year to just over $9 million.
Wise Regional has existing debt of $83 million on facilities in Decatur, paid down from $99 million over the past six years.
A portion of those bonds, issued in 2004, are re-fundable next year, and that action should allow the hospital to lower its interest rate and debt service payment.
“There’s a 10-year call provision,” Summers said. “So we hope we will be able to achieve an investment-grade rating and get that rate reduced in the next year. That would probably be a pretty good savings – even one percentage point, on the kind of money we’re talking about, is substantial.”
Over the last week-and-a-half, staff members at Wise Regional have begun meeting with staff and managers at North Texas Community Hospital, working on the details of merging it into the Wise Regional system.
“All but 45 of their employees have signed up into our system to make the transition when they come,” Summers said. “They are working to get moved over to our system, and there will be some interchanges of people back and forth for some time as we get everyone on the same page.”
One of the biggest transitions is to electronic medical records, Summers said. Wise Regional is almost fully converted to that system, while NTCH had not yet begun their switchover.
Summers said there will also be a few minor modifications to the building in Bridgeport – some of which has already begun.
Several of the 57 physicians currently on staff at NTCH also hold staff privileges at Wise Regional. Summers said he has met with some of those who do not, to discuss policies and requirements.
“Any of their doctors there can apply for staff privileges,” he said. “Just give us a call.”
But, he added, that process takes a little time. Depending on when the two hospitals merge, doctors would likely need to apply soon to be able to practice in both facilities as soon as the doors open.
Wise Regional has 152 physicians who are voting members of the medical staff.
North Texas Community Hospital, licensed for 35 beds, opened in August of 2008 but by the following May was already in default on its $59.1 million in construction bonds, which were issued in January 2007. The facility filed for Chapter 11 bankruptcy protection on Nov. 8 of last year.