A deal to purchase Pontiac’s bankrupt North Oakland Medical Center came through at the 11th hour last week after Michigan agreed to a deal to sell the facility.
The deal will create the state’s largest privately owned hospital. It will be owned by a private physician’s group, the Oakland Physicians Medical Center LLC, and Flint-based McLaren Health Care System will have a 35% ownership stake in the facility as well.
The last-minute purchase came a few days after the 336-bed hospital closed its doors and began preparing for liquidation after the physician’s group apparently was unable to find sufficient financing to close the deal. The purchase was made possible with a $5.7 million infusion from the state’s Medicaid fund. The physicians pitched in $2 million and McLaren put in $5 million.
NOMC owed roughly $38 million in debt issued originally through the Pontiac Hospital Finance Authority. Bondholders are expected to receive $3.2 million, according to documents from the bond trustee US Bank NA. That money comes on top of roughly $3 million from debt service reserve funds that US Bank distributed to bondholders in June. A majority of bondholders signed off on the plan in September. The facility had already defaulted on two bond payments earlier this year.
Also under the deal, the fiscally strapped city of Pontiac will receive 5% of the hospital’s profits. The hospital will be renamed the Doctors Hospital of Michigan.