Bankruptcy Court OKs BMC Bid for Northern Berkshire Healthcare Assets
U.S. Bankruptcy Court in Springfield approved the sale of Northern Berkshire Healthcare's assets to Berkshire Medical Center.
SPRINGFIELD, Mass. — A U.S. Bankruptcy judge on Thursday morning approved the sale of the assets of the defunct Northern Berkshire Healthcare to Berkshire Medical Center for $4 million.
BMC, headquartered in Pittsfield, was the only bidder on the facilities that include the campus of the former North Adams Regional Hospital and the building off State Road that houses Northern Berkshire Family Practice.
Attorney John F. Rodgers, representing BMC's parent company, Berkshire Health Systems, said the outcome of the bidding process provides some certainty to BMC's current operations at the North Adams hospital.
BMC set up an emergency satellite facility at the hospital in the weeks following its abrupt closure. The facility, strongly supported by state officials and U.S. Bankruptcy Court, was based on a yearlong lease to prevent its disruption should another entity successfully bid on the process.
Any further expansion in North Adams depend on the findings of a report commissioned by the state on the health care needs of Northern Berkshire, Rogers said.
"We are all waiting for what the study by Stroudwater [Associates] recommends to see where we go next," said Rogers, vice president and general counsel for NBH.
The health consultants have been speaking with local officials and residents as part of their study of the area's medical needs. At least a preliminary report is expected this month with further recommendations to be presented to the Legislature.
Mayor Richard Alcombright said it was a good step forward that relieves the city of some of the "angst" of the last five months.
"From the city's perspective, this looks closer to a done deal and just solidifies BMC's presence in North Adams, and that's a good thing," said Alcombright.
Rogers said the real estate transaction was expected to close by the end of August. BMC will also take responsibility for cure claims, or unpaid vendor contracts, against NBH.
Bidding on the hospital assets were due on Thursday, July 24; BMC had submitted the "stalking bid" of $4 million ($3.4 million for the hospital and $600,000 for the doctor's practice building) to set a base price and to ensure a sale.
Donald Ethan Jeffery of Murphy & King, Professional Corp., representing the U.S. Trustee, said the property was "vigorously marketed" through the court-appointed Trustee Harold Murphy and DJM Real Estate to both the health-care and development industries.
There were a number of inquiries, "kicking the tires," he said, "but unfortunately did not result in any contractual offers."
He told Judge Henry J. Boroff that he felt the attempts to sell the property met the business standards in good faith. The other parties to the process, including the attorney general's office and Wells Fargo, N.A., trustees for the bondholders, were satisfied with the process and awarding the bid to BMC.
"It's been a very smooth process in trying to get to this goal," said Jeffery.
Attorneys Joseph H. Baldiga, representing BMC, and Rick L. Frimmer, representing Well Fargo, said their clients had no objections to the sale as stated.
The court also agreed to a motion to destroy outdated and obsolete paper records relating to hospital administration dating back more than a century, and a request by the Massachusetts Nurses Association to keep an extra 10 years of records relating to its members. The documents do not include patient records.
"Assuming there is no appeal during the 15-day appeal period that follows today's hearing, Berkshire Medical Center and the Trustee will proceed to a closing of the transaction, an event that is likely to occur in late August," said Michael Leary, spokesman for Berkshire Health Systems.
The Stroudwater study's
recommendations "will play a part in helping Berkshire Medical Center to determine the most appropriate role for BMC in providing health-care services in Northern Berkshire," he said.
The Pittsfield-based health system hired personnel at the family and OB-GYN practices, and the visiting nurse association when Northern Berkshire Healthcare declared bankruptcy in April
. It has since rehired a number of former NARH personnel to staff the emergency facility and added on outpatient imaging services
. A federal license to restore mammography services is still pending.
Rogers said the goal would be to met health needs in a way that would be financially sustainable, adding that the current state of delivering health care is "very fragile."
In the meantime, the attorney general's office is continuing to investigate the closure of NBH, particularly its failure to give 90 days' notice as required by law. The struggling health care system had tried to reorganize, sell assets and seek limited bankruptcy protection over the last decade before filing for Chapter 7 bankruptcy liquidation in March.
"The approved sale of North Adams Regional Hospital is a substantial step toward maintaining and improving essential health care in these communities. After the hospital's abrupt closure and subsequent bankruptcy filing, our office worked with stakeholders, the court, and members of state government including Governor Patrick, Secretary John Polanowicz, Commissioner Cheryl Bartlett, Senator Ben Downing, Representative Gailanne Cariddi, and Mayor Richard Alcombright to ensure a proper and prompt transition," said Attorney General Martha Coakley in a statement. "We are grateful for Berkshire Medical Center's dedication in this process that will continue access to safe emergency services for local residents."
The purchase of the facility by BMC, a known entity, is seen as providing some medical security in North County.
The Massachusetts Nurses Association hailed the sale as "yet another important step on the road to the nurses’ and the community’s ultimate goal, which is the restoration of a full-service hospital to protect the health of the residents of Northern Berkshire County."
"We're optimistic because Berkshire Medical Center operates Fairview Hospital in Southern Berkshire County and understands the need for hospital services in both South County and North County. We intend to continue to work with our allies in the community, local, state and federal policymakers and BMC to achieve this goal," the registered nurses union said in a statement.
"This is the best result for the 40,000 residents around North Adams," said Robert Ross, chief of the attorney general's Business and Labor Bureau.
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