by CYRYL JAKUBOWSKI
Our Lady of the Resurrection Medical Center, 5645 W.
Addison St., is being sold to Community First Healthcare of Illinois after
Presence Health signed a letter of intent with the newly formed benefit
corporation to sell the financially struggling hospital, according to
officials.
The hospital is part of Presence Health, the largest
Catholic health system in the state, which was created in 2011 through the
merger of Resurrection Health Care and Provena Health. Presence has 12 hospitals
and 22,000 employees, 4,000 medical professionals and a revenue base of nearly
$3 billion.
"They have met the criteria that we have set to best
serve the health care needs of the community," Presence Health spokeswoman
Angela Benander said. Benander would not disclose the financial details of the
agreement until the deal is completed.
Community First Healthcare spokesman Ed Green said that
the benefit corporation was formed in order to help hospitals like Our Lady of
the Resurrection to continue to serve the community. Green said that benefit
corporations operate like a mix of nonprofit and for-profit organizations. He
said the corporation's mission is not only to maximize profits but also to make
a commitment to benefit to the community.
Governor Pat Quinn signed the Benefit Corporation Act
into law in 2012. The law provides that a corporation may elect to become a
benefit corporation by amending its articles of incorporation. The corporation
must have the purpose of creating a general public benefit, and it is required
to file an annual report with the Secretary of State's Office.
The New York-based Muneris Capital Group, which works to
turn around hospitals experiencing financial difficult, is financing the
corporation, Green said.
"We have excellent senior executives who have
experience, we have idea men, we have the finances from Muneris, and we are
hoping that things will fall in line to do what's right," Green said.
"We are excited about this opportunity."
The investors have "resources to support a
turnaround for the hospital that will enable it to continue to serve an
important role in promoting the health of its community now and in the future.
The Community First Healthcare local executive team has significant health care
experience in the Chicago market," according to a Presence Health press
release.
Green said that venture intends to make improvements to
the hospital. "We are going to invest $20 million over 5 years into the
facility itself," he said. "One idea that we have is to take the aging
emergency room and take that ER and tweak it, modernize it."
"If you modernize that ER and put some resources in
it, remodel it, now you have a facility that can take in more patients and that
hopefully increases admission rates," Green said. "There is no silver
bullet, and this will definitely take some time, but we like the communities
around that hospital, how engaged people are, and we want that."
Presence announced that it was selling the hospital in
March, citing years of operating losses and anticipated financial shortfalls
this year. The announcement to sell came after months of speculation that the
center might close or move away from providing inpatient care because of
industry trends.
Our Lady of the Resurrection suffered an operating loss
of $12.5 million in 2012. The loss was reduced to $9.8 million last year after
cost-cutting measures, but an estimated $19 million loss was anticipated this
year, officials said.
Presence also has signed a letter of intent with Glen
Health and Home Management to sell the Presence Ballard Rehabilitation nursing
facility, 9300 W. Ballard Road, Des Plaines, and the Presence Saint Andrew Life
Center, 7000 N. Newark Ave., Niles, Benander said.
Benander said that the buyers agreed that they will
strengthen the facilities and keep Our Lady of Resurrection an inpatient care
facility, Ballard as a skilled nursing facility and Saint Andrew as a
retirement and senior care facility.
"The bottom line is that they have signed a letter
of intent and they can maintain their existing services, and the employees
would be able to keep their sick time for their years of service,"
Alderman Timothy Cullerton (38th) said. "From the perspective of the
community, I think that this is a good thing because before we were talking
about closing the hospital. They might bring in new management staff or some
job loss might happen because of attrition, but I think they are committed to
keeping it the way it is."
Cullerton said that the hospital's emergency room will
remain open.
"We are pleased that Community First Healthcare and
Glen Health and Home Management will continue to serve the respective acute
care and senior care needs of these communities," Presence Health
president and chief executive officer Sandra Bruce said. "Both organizations
have expressed their desire to continue our commitment to serving the needs of
these communities and are committed to retaining employees and maintaining
existing charity care. As a Catholic health care system, these were all
critical factors in our selection process."
Bill Brownlow, who will serve as the president of
Community First Healthcare said that the leadership of the corporation has
experience with transforming hospital operations and that organizing Community
First as a benefit corporation will allow people to strike a balance between
meeting the needs of the community and the financial strength of the medical
center.
Green said that Brownlow has worked on projects in Joliet
"that rely heavily on Medicaid and are in urban settings." He said
that Our Lady of the Resurrection fits the organization's model and that the
corporation's officers are confident that they can revive the hospital and
implement community services.
"We are going to be working on the financial
agreements by the end of the summer with the goal of closing on all
transactions by the end of the year," Benander said.
The hospital opened as Northwest Hospital in 1955, and it
changed its name to John F. Kennedy Medical Center in 1986. An intensive care
unit opened in 1969, and the hospital was formed as a nonprofit institution in
1968.
The hospital became a part of Resurrection Health Care in
1988, and Chicago-based Resurrection Health Care and Mokena-based Provena
Health merged in 2011.