Becker's Hospital Review

13 CFO / FINANCE Financial troubles force Texas health system to shut down By Ayla Ellison R ockdale, Texas-based Little River Healthcare closed all of its facilities Dec. 4, including two hospitals and several medical clinics. In a letter sent to employees Nov. 30, Little River Healthcare, which entered Chapter 11 bankruptcy in July, said it would shut down the hospitals and clin- ics Dec. 7 because it was unable to find new owners for the facilities. The health system ceased operations Dec. 4 "due to unfortunate financial conditions," ac- cording to a message on its website. Little River Healthcare is seeking to convert its bank- ruptcy case to Chapter 7, allowing it to liquidate its assets. In documents filed in the case, the health sys- tem claims its lender, Monroe Capital Management, has denied several funding requests, including one totaling $700,000 for the week ended Nov. 30. Monroe Capital Management said it denied the bud- get requests for several reasons, including the health system's inability to accurately forecast or perform. Little River Healthcare laid off a total of 298 workers when it shut down, a Texas Workforce Commission spokesperson told KWTX. n Physician group with 873 employees files for bankruptcy By Ayla Ellison T roy, Mich.-based University Physician Group, which does business as Wayne State University Physician Group, filed for Chapter 11 bankruptcy Nov. 7. "UPG has determined that its clinical operations are no lon- ger sustainable in the absence of long-term external sub- sidy," University Physician Group CEO Charles J. Shanley, MD, said in bankruptcy documents. Dr. Shanley said several factors contributed to the group's weakened financial state, including declines in operational and revenue cycle performance. "Perhaps most importantly, during a decade of steadily declining clinical revenue, UPG maintained an expansive and underutilized long-term leasehold portfolio distributed throughout metropolitan Detroit to support the missions of several of the smaller clinical departments in the context of a deteriorating relationship with one of UPG's affiliated hospitals," he said. "Occupancy and overhead expenses re- quired to maintain these underperforming assets became a pernicious tax on the organization that is no longer sustain- able at current volumes." UPG intends to continue operating its business through- out the Chapter 11 process as a debtor-in-possession. The group will continue to support clinical operations on the Detroit Medical Center central campus, but plans to ulti- mately suspend operations at all suburban sites, according to bankruptcy documents. "Today's restructuring news is truly about UPG realigning itself to its organizational mission," Dr. Shanley said in a statement to Becker's Hospital Review. "UPG is driven to provide the highest quality care to the patients and com- munities we serve as we train the next generation of provid- ers. This is only enhanced by taking today's actions. Patients will continue to see their doctors and our staff will continue to teach and serve the community here in Detroit. As the DMC's partner, we too seek to be the best version of UPG, a truly strong participant within the growing partnership." In its bankruptcy petition, the physician group, which has 873 employees, listed its assets as between $10 million and $50 million and listed its liabilities in the same range. n UnitedHealth Group to buy Seattle primary care clinic By Alia Paavola U nitedHealth Group will acquire a controlling stake in Polyclinic, a large physician-owned primary and specialty care clinic in Seattle — the latest move in the company's push to expand its direct patient care business, according to e Seattle Times. Under the deal, Polyclinic's 210-physician practice would merge with Optum Health, a subsidiary of UnitedHealth. e Optum business manages physi- cian groups around the country. Polyclinic was founded in 1917 by six Seattle physicians and has grown to be- come one of the largest multispecialty groups in the nation. Despite its ability to scale in size, the practice found it hard to compete with other Seattle area healthcare providers such as Swedish Medical Center and the University of Washington Medical Center. By merging with Optum, Polyclinic will be able to tackle "the things that you just need to be big enough to afford to do," UnitedHealth Group CEO David Wichmann told investors during a meeting in New York, according to the Times. e deal also will expand the clinic's access to technologies and other physi- cian groups within Optum. e acquisition needs approval from the Federal Trade Commission and would supplement a separate deal with DaVita Medical Group to acquire the 500-physician Everett Clinic, a primary and specialty clinic based in Seattle, and Northwest Physicians Network, a 1,000-plus physician practice in Pierce County, Wash. Financial terms of the deal were not disclosed. n

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