It’s official: Sale of LRGH, Franklin assets to Concord Hospital formally approved

LACONIA — Nearly two years ago, LRGHealthcare CEO and President Kevin Donovan sent a memo to employees saying it was seeking to partner with a “like-minded” organization in order to solve financial problems.

On Thursday morning, a final order approved by Judge Michael Fagone was entered into the docket in U.S. Bankruptcy Court approving the sale of the healthcare system and its two hospitals to Concord Hospital for $30 million.

In the order, those two hospitals — Lakes Region General Hospital and Franklin Regional Hospital — are referred to by their new names Concord Hospital-Laconia and Concord Hospital-Franklin.

The next step will be regulatory filings with the state Attorney General’s office, with a goal of being able to close the sale transaction shortly following clearance from the AG.

On Wednesday evening, in a final hearing before approving the order, Fagone thanked the attorneys and said the sale was “incredibly important for the hospitals and the community.”

“I know there are other hurdles to be cleared before the transaction concludes but this is an important one and I do appreciate the professionalism with which all of you have conducted yourselves,” he said.

LRGHealthcare filed for bankruptcy on Oct. 19 after years of losing money and struggling under a heavy debt load.

Concord Hospital President and CEO Robert P. Steigmeyer said in a statement Wednesday the purchase of the hospitals and their ambulatory sites is a good step forward for local health care.

“Our goal in acquiring the two Lakes Region hospitals is to build a sustainable health system in the region,” Steigmeyer said. “Lakes Region communities need access to local health care and our intent is to keep services in the communities and accessible to all.”

He said that for the immediate future there will be no major changes in services.

Concord Hospital leadership will oversee the hospitals in Laconia and Franklin, but clinical service departments will operate separately.

“This gives us the opportunity to fully support operations at the two hospitals while learning how to best serve our patients,” he said.

“The Lakes Region is an extension of Concord Hospital’s service area, particularly for some tertiary services, and so acquiring these two hospitals aligns with our not-for-profit, charitable mission,” he said.

“LRGHealthcare has provided excellent healthcare services in the communities the organization serves, and we intend to honor that commitment,” Steigmeyer added. “We don’t want to disrupt these services; we want to build upon them.”

The final sale order mentions that, until October 2024, the Hillside Surgery Center in Gilford, which is affiliated with LRGHealthcare, will continue to receive from the Laconia hospital back office services, billing, collections, staffing, human resource services, quality consulting and auditing and access to a medical records system.

Net proceeds from the $30 million sale are to be applied to the biggest facet of LRGHealthcare’s debt, a $111 million facility mortgage owed to Key Bank and insured by the U.S. Department of Housing and Urban Development.

When Donovan announced two years ago that an effort would be made to partner with another healthcare provider, bankruptcy was not the first choice.

Finding a suitable partner did not materialize without utilizing provisions under Chapter 11 of the U.S. Bankruptcy Code, which allows debt to be discharged.

Concord Hospital immediately emerged as an interested bidder on LRGHealthcare’s assets, and its bid set the floor for a planned auction among other health care organizations that initially expressed interest in a purchase. Ultimately, none of these other groups decided to bid, so no auction was held.

LRGHealthcare has 1,400 full- and part-time employees and is the largest employer in the Lakes Region.

Even before the impact of COVID-19, LRGHealthcare was consistently losing more than $1 million a month.