Pontiac’s Doctors’ Hospital files for bankruptcy
Doctors’ Hospital in Pontiac, the last independently operated medical facility in Metro Detroit, has filed for federal bankruptcy protection after years of operation turbulence and financial problems.
The for-profit, physician-owned hospital, which operates as Oakland Physicians Medical Center LLC., owes at least $13.8 million to creditors, according to the Wednesday filing of the top 20 creditors with the U.S. Bankruptcy Court for the Eastern District of Michigan.
In its filing, the hospital indicated it has at least 200 creditors and could owe as much as $50 million.
The Pontiac hospital was dogged by financial struggles in a Metro Detroit market where health systems have become larger and the pace of mergers has quickened. Other independent hospitals merged or affiliated with large health care systems such as Beaumont to shave costs and stabilize their cash flows.
Doctor’s Hospital lost nearly $12 million in 2013, according to the American Hospital Directory. More recent financial data was not immediately available.
In June, a judge ordered the hospital to pay more than $2.6 million to two doctors, one of whom is a former board member. Surindar Jolly, Sanjay Jolly and Shree Investment Group in Orchard Lake are listed as major creditors after they gave loans to the hospital.
During the same month, the hospital found out it was at risk of losing Medicare dollars after inspections in previous years found violations of patients’ rights, quality assurance and infection control, among other issues.
In the bankruptcy filing, Wisconsin Physicians Service Insurance Company is owed the most money at $6.4 million, followed by the state of Michigan at $1.2 million in tax debt. Several individual doctors claim they are owed hundreds of thousands of dollars in loans.
Messages left for the CEO of Doctors’ Hospital and attorney Thomas Radom were not immediately returned Friday evening.
The current version of the hospital opened as a private, for-profit facility in 2008 with backing from a group of physician investors after the former North Oakland Medical Center declared bankruptcy. The facility had operated as the city-owned Pontiac General Hospital until 1993, when it was sold and assumed the North Oakland name.
In February 2011, a group of physicians bought McLaren Health Care Corp.’s 35 percent stake in the hospital, pooling about $3 million to make the deal happen.
The deal gave physicians sole control of the hospital’s ownership and operation. Prior to the deal, 42 doctors owned a 60 percent stake in the hospital, with McLaren as an institutional investor.
The hospital lost $31 million in 2008, $2 million in 2009 and likely $1.5 million in 2010, McLaren said at the time the deal was made.
A year before the deal with McLaren, the 336-bed hospital warned the state that it could close or lay off up to 690 employees if efforts to sell or restructure the hospital failed.
By the fall of 2011, the hospital had 30 medical/surgical beds, 26 skilled nursing facility beds and 15 inpatient acute rehabilitation beds and about 125 employees.