Doctors buy bankrupt Atlanta hospital

A group of physicians is breathing new life into a hospital in Atlanta that has been shuttered since January.

After winning a bankruptcy judge's approval, Southwest Doctors Group LLC, a group of 30 African-American physicians, bought Southwest Hospital and Medical Center for $14.8 million. The transaction was completed July 5 after weeks of wrangling to bid and fund the purchase of the facility, which serves a mostly poor and African-American community in Atlanta. The new owners say they wanted to ensure the community had access to care and to eliminate disparities in care for minorities.

The new owners plan to spend about three months remodeling the hospital, which has about 125 beds. By October, they hope to begin offering limited medical services such as medical surgery, obstetrics, urgent care and limited emergency care.

But they don't plan to keep that facility open for too long. Ultimately, they hope to build a new hospital to serve the community, which had enjoyed the services of Southwest for nearly 40 years before its closure.

"We're doing it for the community. The community needs a hospital. It has to be a hospital that has state-of-the-art services, and if we can provide that, which I'm sure we will, I'll be able to attract my group as well as several others to utilize the hospital," said John Ross, MD, an internist and one of the five physicians who helped buy the facility.

Dr. Ross said the 30 physician investors reached into their own pockets to finance the deal, as well as receiving a $12.8 million loan from Tracy L. Sayers Investment LLC, a private investment firm in Columbus, Ga. Now the group is endeavoring to raise nearly $150 million for the new hospital. They are trying to secure bonds and are looking into private equity as an alternative.

The hospital will continue to function as a nonprofit entity, though the land it is on will be owned by the for-profit Southwest Doctors Group, he said.

The old Southwest hospital was about $25 million to $30 million in debt when it filed for Chapter 11 bankruptcy protection in September 2004, said G. Frank Nason, a partner with Lamberth, Cifelli, Stokes & Stout, who represented the hospital in its bankruptcy.

Those creditors are being paid with proceeds from the sale, so the new physician owners are getting the hospital free from its debts, Nason said.

He said another group that included some local physicians also expressed interest in buying Southwest but never submitted a qualified bid to the bankruptcy court. Dr. Ross said that group was now working with the new owners to shape the future of the hospital.