By JEFF PARROTT
Tribune Staff Writer
8:06 AM EST, March 1, 2011
Memorial Hospital has reached an agreement to buy some remaining Madison Center assets and take over delivery of inpatient mental health care in those facilities.
Memorial will acquire buildings and programs of the GeroPsych Institute, Madison Center Hospital and Riverside Hospital, under a deal confirmed Monday by Madison Center's acting CEO, Michael Lane.
Those programs are the final remnants of the once-giant mental health care provider.
St. Joseph Circuit Court Judge Michael Gotsch in October appointed Lane, with Chicago-based Navigant Capital Advisers, to take over management of Madison Center as it neared financial collapse because of its massive debt load.
Lane declined to say how much Memorial is paying for the assets, but said those terms will be detailed in documents to be filed in court over the next day or two.
"All around it's good," Lane said. "It's good for Madison Center, it's good for the community, it's good for job preservation."
Lane said he expects Memorial to retain the "vast majority" of the roughly 275 employees left at Madison Center, but he noted that ultimately will be up to Memorial.
Memorial once provided psychiatric care but closed its psychiatric unit in 2000, under an agreement with Madison Center.
Lane acknowledged that the deal isn't great for everybody. Madison Center's bondholders, owed some $53 million, have agreed to release their liens on Madison Center's assets.
"The bondholders are going to take substantial losses on the sale," he said. "It's a write-off, for lack of a better word."
The bondholders will receive the proceeds from the sale, along with any money that other entities pay for the rest of the buildings on the Madison Center campus. Lane said there is strong interest in the buildings from other nonprofits and health care providers.
About 700 people now work on campus, between Madison Center and Goshen-based Oaklawn Psychiatric Center, which has assumed delivery of outpatient care from Madison Center. Lane predicted employment on campus will reach 1,000 within a year, once the other buildings are sold and put back into use.
"I told people I didn't come into this community to shut it down," Lane said. "A lot of people are interested in the campus. It's a nice campus. It was just too much (for Madison Center). It's beginning to become vibrant again."
The state and federal governments could be other losers. A false claims act lawsuit the government filed against Madison Center in June seeks repayment of more than $10 million from allegedly false Medicaid claims. The law allows plaintiffs in False Claims Acts to recover triple the damages if fraud is proven, which could mean a more than $32 million judgment should the plaintiffs prevail.
But if Madison Center sells off all of its assets, what will be left for the government to go after?
Lane declined comment.
Madison Center has filed a motion to dismiss the suit. U.S. District Judge Robert L. Miller Jr. will hear the parties argue the motion Friday.
Staff writer Jeff Parrott:
Copyright © 2013, WSBT-TV