Lion Star, the group that runs Nacogdoches (Texas) Memorial Hospital, has reached an agreement with the Nacogdoches (Texas) County Hospital District to transition its operations of the hospital to the district on or around March 15.
"This was a very difficult decision on the part of the hospital's leadership, but one which was necessary to allow the hospital to continue to serve the medical needs of the community," a Lion Star spokesperson said in a statement shared with Becker's.
The agreement made between the two parties pertains to part of the Lion Star bankruptcy case in the terms of a court order that returns the hospital to the district, according to a statement from the hospital district.
Lion Star filed for Chapter 11 bankruptcy in November, with the filing stating that the hospital owes up to $50 million to creditors.
"After a short 15-day transition period, the district will take full control of all hospital operations and patient care," the hospital district said. "Due to the severity of the situation, the district, as promised, used all available resources to return the hospital to the citizens of Nacogdoches County."
News of the hospital's transition comes after Lion Star shared plans to close four of its clinics by March 22, which would result in the layoffs of fewer than 50 people.
"The district intends to continue full operations, including the clinics in Nacogdoches & Garrison," the hospital district said. "We appreciate the patience and understanding of the medical staff, physicians and the community during the difficult bankruptcy proceedings."
Lion Star and the Nacogdoches County Hospital District are also both under indefinite payment holds by the Texas Health and Human Services Commission related to unpaid Medicaid disproportionate share hospital and uncompensated care payments that total more than $7.2 million, according to a statement shared with Becker's from the Texas HHSC.
"In 2021 when Lion Star submitted the change of ownership documentation during their Medicaid enrollment process, Lion Star voluntarily agreed to assume all prior liabilities and payments related to Nacogdoches Memorial Hospital," the Texas HHSC statement said. "As a result, Lion Star is the entity of record that is responsible for returning overpayments to the state and federal government."
The hospital district "repeatedly assured" Lion Star that these payments would be made, Sean Fowler, CEO of Lion Star, said in a statement shared with Becker's.
"This situation is due directly to the district's failure to meet its financial obligations," he said.
However, the district claimed Lion Star knew about the recoupments before it took over and has not communicated with the HHSC or forwarded the district's "numerous" communications with HHSC.
"The district has honored its indemnity commitment and wired over $2 million dollars to handle the recoupment due now, and has scheduled a meeting with HHSC to discuss further repayment options," the district said.
Now that an agreement to transfer the hospital's operations back to the district has been reached, a hearing is scheduled for March 4 to enter the court order in federal court, the district said.
Hospital operations will continue to run normally during the short transition period, the Lion Star statement said.