A bankrupt Eastern Kentucky hospital has been purchased by a regional bank, whose owners plan to keep it operating as a health care center.
First State Bank of the Southeast, which operates branches across Kentucky and Tennessee, closed on its purchase of Pineville Community Healthcare in Bell County last week for $2.6 million, according to state bankruptcy court filings.
The regional bank was the second highest bidder in a sealed bid auction behind Louis Volpini, who bid $7 million on behalf of Cura Healthcare, Inc. That group, though, lost its top ranking when it failed to make the required initial deposits, including a 20 percent cash deposit of $1.4 million.
First State Bank, second in line, was then able to purchase the 120-bed facility and campus for $2.6 million, plus a 5 percent buyer’s premium, for a total of nearly $2.8 million. The sale closed Sept. 5.
The regional bank “will not run hospital operations, themselves,” said John Sosbe, a Georgetown-based attorney who served as legal counsel to First State Bank. Instead, the bank will likely lease the building to a non-profit group of local stakeholders who took over the hospital and changed its name to Pineville Community Healthcare when the bankruptcy proceedings began, he said.
The hospital is a “major asset to the community and [First State Bank] wants to keep it as an asset to the community,” Sosbe said.
A Kentucky bankruptcy court intervened earlier this summer and gave temporary control of the Pineville hospital to a bankruptcy trustee and the city of Pineville. This happened after the facility’s former owner, Pineville Community Hospital Association, Inc., sold all it’s non-real estate assets to Americore Health, LLC in 2017 and declared bankruptcy a year later.
In early 2019, the hospital lost its contract with the Centers for Medicaid and Medicare Services following dozens of incidents showing the facility lacked necessary medical devices and medication to provide care, and staff had, on a few occasions, performed the wrong procedures on patients without their permission. By the time a bankruptcy court got involved, management had stopped paying rent on the facility and employees hadn’t received their paychecks in about two months.
In late June, a handful of current and former hospital employees filed a class action complaint against former owners, management and the hospital board for regularly deducting money from their paychecks for health care coverage they never received. That suit is still ongoing.
Pineville Mayor Scott Madon, who chairs the current hospital board, said Monday that “morale is much better” among hospital employees now that operations have stabilized, in large part because paychecks owed to employees have mostly been paid back and they once again have access to health insurance.