When a Southwest-based psychiatric hospital went into default on its real estate loan and revolving line of credit, the secured lender appointed MCA Financial Group as receiver. The objective? To ensure continuity of operations and patient care while preserving the going-concern value of the hospital during the receivership sales process.
Patient demand was not the root cause of the hospital’s financial issues. Due to inexperience on the business side of the ledger, the administrative team was failing to meet budgets and properly bill and collect for services and was running out of cash as a result.
MCA took control of the business operations, replacing key managers in billing, admissions and facilities with more qualified staff. On the clinical side, an experienced licensed management company was hired to assume operations and maintain clinical and regulatory compliance with state and federal groups.
A communication plan for employees and families of patients ensured a smooth transition to the new leadership. Because addressing regulatory issues is critical for successful receivership engagements, MCA also developed a transparent outreach to state and federal regulators about the plan. Retaining qualified licensed professionals helped significantly with success with regulatory matters, while retaining key healthcare service providers was equally important for maintaining patient care.
Throughout the process, the MCA team brought an understanding of healthcare operations, hospital administration and the regulatory environment to the table. The real estate lender, revolving line of credit lender and shareholders (including management that owned a controlling interest) were brought together under a receivership sale plan.
After overcoming many opposing objections, MCA gained each party’s consent to the transaction and no court fight was required. MCA exceeded the lenders’ expectations, with a full recovery on both loans through a successful sale of the hospital operations to one party and the sale of the real estate to a separate investor.
Reach out to learn how MCA can help you navigate complex transitions with confidence.