NEW YORK – A landmark New York hospital that closed more than a year ago is being saved from bankruptcy through an innovative development deal.
Saint Vincent’s Catholic Medical Centers of New York has announced the $260 million sale of its Manhattan campus to Rudin Management and the North Shore-LIJ Health System, paving the way for the opening of a 24-hour emergency center and ambulatory surgery center – along with luxury condominiums, some retail space and a school.
The deal was structured by Grant Thornton LLP’s Corporate Advisory & Structuring Services practices and returns to the spotlight a 162-year-old Greenwich Village health system that was well known for treating HIV and AIDS patients during the 1980s and being the first response hospital for the 9/11 terrorist attacks. As approved by a bankruptcy court judge on April 7, it would allow for the conversion of the former hospital’s O’Toole Building on Seventh Avenue into the 160,000-square-foot North Shore-LIJ Center for Comprehensive Care, while other buildings on the site will house luxury condominiums and retail space.
The medical facility will offer 24-hour emergency services but no inpatient care.
The plan has drawn opposition from a number of neighborhood activists who feel the area needs more comprehensive healthcare services. But Steve Korf, a Grant Thornton partner who was appointed St. Vincent’s chief financial officer last year, said the parties involved had to be realistic.
“In bankruptcy we have many masters, so to speak,” he said. “Certainly, we’re dealing with the loss of a historic institution … but it just wasn’t the best value to keep the hospital open. We think we’re providing a good solution and catering to the needs of the healthcare community.”
"It's financially unfeasible to develop a full-fledged hospital in this economic landscape," North Shore-LIJ spokesman Terence Lynam told the Washington Square News. "In this environment, where you have declining state reimbursements through Medicaid, you have hospitals closing all over the city, all over the state."
“This transaction is a positive outcome for the residents of Manhattan’s Greenwich Village neighborhood and surrounding communities,” added Mark Toney, Grant Thornton’s national managing principal and chief restructuring officer of the St. Vincent’s deal. “The Saint Vincent’s team, including our counsel, have worked very closely with the Rudin family and the North Shore-LIJ Health System to create a long-term healthcare solution serving the lower downtown New York community with the building of this critical care center. We had to balance the interests of a wide range of constituents involved in Saint Vincent’s court-supervised restructuring process.”
The proposed free-standing emergency department will employ more than 300 and is expected to treat 72,000 patients a year, officials said. In addition, North Shore-LIJ will invest $110 million, including $10 million from the Rudin family, to develop the project, which will include new residential and retail space, a neighborhood school on 17th Street and a renovated park at the corner of Greenwich Street and Seventh Avenue.
The deal must now be approved by the New York State Department of Health. If approved, the deal would close in September.
Many former employees of the hospital, along with the New York State Nurses Association, have expressed concern with the proposal, saying it doesn’t meet the community’s need for a full-service hospital. A rival group had asked for a 45-day delay to seek creditors and developers for a more comprehensive medical campus, but could offer no concrete plans.
Former City Councilman Alan Gerson had filed an affidavit with the court, indicating “high officials” from two major medical centers in New York City had “expressed an ongoing interest in working with a developer to provide more medical and emergency care than the current plan proposes to divide.” The only collaborator that Gerson and his associates could name was the National Football League Alumni Association, which had allegedly expressed interest in developing a hospital on the site for NFL players and the public.
Neither the court nor North Shore-LIJ officials were swayed by the request.
After emerging from its first bankruptcy in 2007, the storied medical campus, founded in 1849, continued to see operating losses, declining revenues and rising costs, and was saddled with more than $1 billion in liabilities when Grant Thornton took over onsite operations in January 2010. Toney and Korf first looked for interim funding, then moved to ensure continuity of care while closing down the full-service hospital one year ago.
More than 1,000 people lost their jobs in the closure, while a small urgent care established by Lenox Hill Hospital remained as the community’s only medical lifeline.
Remaining assets of St. Vincent’s, including several nursing homes, are being sold to pay creditors.
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