Sabra Health Care REIT Inc. is exploring three options to address financial concerns at Forest Park Medical Center in Frisco, the company’s CEO said during an Aug. 5 second-quarter earnings conference call.
In May, Sabra amended FPMC Frisco’s lease agreement so the hospital’s management company, The Management Company at Forest Park Medical Center, can pay less rent each month, according to Sabra’s second quarterly report for 2015.
Sabra would not comment further after the conference call regarding the status of each of the options.
FPMC Frisco sent the following statement to Community Impact Newspaper regarding the amended lease agreement:
“The leadership team at Forest Park Frisco continues to work diligently to ensure a bright future for the hospital. As in all businesses, financial stability is a major factor to the hospital’s success, and hospital leadership, alongside members of The Management Company at Forest Park, is working to achieve that goal.
“Forest Park Frisco is collaborating with Sabra to reach an agreement on rent adjustments and other improvements to the original [lease]agreement,” the statement continued. “Most importantly, all parties involved are fully committed to the hospital achieving the enormous potential and long-term growth that is desired.
“Our physicians, patients and employees are at the heart of every decision being made, and we thank our team members for their continued support and dedication to top quality, compassionate health care. We would also like to thank the Frisco community for their continued patronage and support; we are proud to be a member of the Frisco business community.”
Richard Matros, Sabra’s chairman, president and CEO, said during the conference call that Sabra is also in early discussions with another hospital company that could take over operations. Sabra is also looking at selling the hospital, Matros said.
FPMC Frisco is a physician-owned hospital in Frisco Square. It is part of a hospital chain that has hospitals in Dallas, Fort Worth, Southlake, Austin and San Antonio.
Sabra, a real estate investment company that owns medical facilities throughout North America, is the landlord for the Frisco and Dallas locations and is the construction lender for the Fort Worth location. Sabra purchased the FPMC Frisco in 2013.
According to the quarterly report, both the Dallas and the Frisco hospitals began having trouble meeting their financial obligations in 2014. In January 2015, FPMC Frisco became unable to pay its rent.
Earlier this year Vibrant Healthcare—the management company for the Frisco, Dallas and Fort Worth hospitals—changed its leadership, rebranded itself to The Management Company at Forest Park Medical Center and changed its management agreement with the Dallas hospital. The Frisco and Fort Worth hospitals are still in negotiations with the management company. The management company then began a multifaceted strategy to improve operations and the financial situations at the hospitals.
On May 29, Sabra amended the hospital’s lease agreement effective June 2015 to defer and decrease rent payments, subject to the hospital’s tenant and the management company obtaining additional financing to go toward deferred rents. As of July 21, additional financing had not been secured. During the conference call, Matros said a loan the hospital applied for had gone into an escrow account but had not been closed as of Aug. 5.
Because of this, the lease agreement was again amended to reduce the funding needed for the deferred rent so the hospital would have the money it needed to continue operations and expand its case volume.
The remaining deferred rent payments as of May 31 are scheduled to be paid over time beginning in 2016.
More about Forest Park Medical Center in Frisco
• Forest Park Medical Center in Frisco is part of a hospital chain with other hospitals in Dallas, Fort Worth, Southlake, San Antonio and Austin.
• FPMC Frisco, which specializes in surgical procedures, has 54 beds. It includes 30 inpatient rooms, 14 family suites, 10 ICU beds and 12 operating rooms.
• FPMC Frisco operates as a physician-owned hospital, a type of hospital in which its doctors at least in part run and own the facility.
• The hospital’s management company, The Management Company at Forest Park Medical Center, manages the Frisco, Dallas and Fort Worth hospitals.
• FPMC Frisco broke ground in January 2011.
• The hospital received its certificate of occupancy from the city of Frisco in June 2012.
• On Oct. 22, 2013, Sabra Health Care REIT Inc., a real estate investment company, purchased FPMC Frisco for $119.8 million.