Santa Clarita / Antelope Valley : Bankruptcy Judge OKs Sale of Palmdale Medical Center
A bankruptcy judge on Thursday approved the purchase of Palmdale’s only hospital--crippled by a bad reputation and its owner’s debts--by the owner of a Lancaster hospital, ending a lengthy battle over the sale.
The purchase by Paracelsus Healthcare Corp., owner of Lancaster Community Hospital, of the Palmdale Hospital Medical Center gives the Pasadena-based company the corner on hospital care in Palmdale and allows it to expand its medical offerings to Antelope Valley residents.
Robert Joyner, vice president and general counsel for Paracelsus, said the company does not immediately plan any changes in the medical services offered at the troubled Palmdale hospital, which currently has pediatric, psychiatric and obstetric services, none of which are provided at the 132-bed Lancaster Community Hospital.
“We’ll be a more formidable competitor (with Antelope Valley Hospital Medical Center),” he said.
In a 45-minute hearing in which another Lancaster hospital and two individuals attempted to have the decision delayed, Judge James Barr agreed to Paracelsus Healthcare Corp.’s plan to purchase the 123-bed Palmdale Hospital Medical Center for $4.5 million, a fraction of the earlier $16 million asking price for the hospital and an additional 22.5 acres owned by Affiliated Medical Enterprises. The land on the north side of Avenue P near Division Street was purchased by Antelope Valley developer Sierra Development Group for $2.3 million. Sierra Development Group is a partner in the Palmdale Promenade, a large retail center near the land the company purchased Thursday.
Orange-based AME, which has been in Chapter 11 bankruptcy proceedings since January, 1991, had planned to build a new hospital on the Avenue P land, which was recently appraised at $4.8 million.
Michael Nutter, an associate with Alvarez & Marsal, the New York-based company appointed to liquidate AME’s assets, said Palmdale hospital is the third of AME’s five hospitals to be sold. The remaining two, including one in Ojai and Pacifica Hospital of the Valley in Sun Valley, are expected to be sold by year’s end.
Besides Paracelsus Healthcare Corp., the public hospital district that operates the 341-bed Antelope Valley Hospital Medical Center in Lancaster was also interested in buying the Palmdale hospital. The owner of two medical office buildings at the Palmdale hospital site, as well as an investor and former hospital operator had also tried unsuccessfully Thursday to have the sale’s approval delayed.
On Thursday, AVHMC representatives asked the judge to delay a decision on the sale, although they did not submit a bid, having failed to reach an agreement with an undisclosed partner. The purchase by Paracelsus must be approved by the Federal Trade Commission.
Nutter said an FTC representative at the hearing Thursday said the sale will probably be approved by the end of the month.
Joyner said any poor reputation associated with AME’s operation of Palmdale Hospital Medical Center will quickly be turned around by the reputation of Paracelsus, which owns 24 hospitals and medical facilities across the United States, including 15 in California.
“The citizens up there will see a very quick change for the better,” he said, although remarking, “it will be an uphill battle, but we’ll make a run on it.”
Little more than two years ago, Palmdale hospital was generating $2 million annually in revenue, Nutter said. Today, its annual loss is about $2 million.
Earlier this year, a proposed sale of the Palmdale hospital to Idaho-based Lapesch & Co for $16 million fell apart.
