Flint organization interested in Sturgis Hospital acquisition

STURGIS - A Flint-based health care organization is going through "due diligence" steps in recently announced interest in acquiring Sturgis Hospital.

Insight has signed a letter of intent to acquire Sturgis Hospital, which has been looking for an investor-buyer in recent months. The hospital has been struggling financially for several years, and recently switched to a rural emergency hospital format to stem costs. The REH setup enables the hospital to provide outpatient and lab services while maintaining an emergency room.

The Sturgis City Commission at a special meeting Monday unanimously approved the due diligence interest from Insight, and authorized Sturgis City Manager Andrew Kuk and city attorney TJ Reed to sign associated paperwork, including a summary term sheet highlighting purchase conditions, as part of the process.

The hospital, which has bond obligations to the city, has had two interested parties in acquiring the hospital at 916 Myrtle Ave. The other entity, Asker Corp., provided its paperwork several weeks ago.

Insight is a nonprofit organization, and would acquire the hospital for $3.3 million, paid over 11 years, with the first payment in September 2024. Asker, a for-profit operation, proposed paying $1.5 million for the hospital up front and then $1.5 million more over five years.

City and hospital officials said it is hoped an agreement can tentatively be made in the coming weeks.

City officials said if Insight were to acquire the hospital, the facility would continue to operate as it is, indebtedness to the city would be restructured, and if all payments are made on time, their obligation to the city would end. Should any payments default, Insight could then owe the city $5 million.

All terms and paperwork are still in development, city officials said Monday, including potential details on how any defaults in payments would be addressed. Ultimately, while the city has a lien on the hospital and its assets due to an ongoing bond from 2009, the city has to agree to what the hospital board is negotiating.

During the special meeting, commissioners asked questions about the latest proposal for Sturgis Hospital.

"Is there anything that says they have to turn back into a full-service hospital?" commissioner Marvin Smith asked Kuk.

That is not what has been negotiated as of yet, Kuk said.

"Anything is possible, but I don't think they're in a position to guarantee that at this point," Kuk said.

Commissioner Rick Bir said he has spoken with his constituents about the hospital and its future.

"My fear is if they continue as an REH, nothing will improve," Bir said. In talking with residents in his district, Bir said, "people are already starting to go elsewhere. What we would like to see is a full-service hospital."

Kuk said that there is a balance to be had in providing services and being a successful entity.

Mayor Jeff Mullins said he has faith that things will work out to the benefit of everyone involved.

"From the conversations we've had, they're committed to doing whatever they can to give the community what it wants," he said.

Dr. Jawad Shah, neurosurgeon and founder and CEO of Insight, said in a statement the Sturgis community "is in critical need of a hospital for essential, life saving care."

"The city leadership, public and private stakeholders are impressive in their collective will to see the community thrive," Shah said. "It is humbling to have Insight considered as a partner to ensure the long term success of Sturgis Hospital."

With support from all levels of government, Insight Chief Strategy Officer Atif Bawahab stated Insight is optimistic the hospital "can operate in a financially stable fashion."

"We will continue due diligence in the coming weeks,” Bawahab said.

Insight operates surgical centers, a surgical hospital, outpatient health care facilities, and youth development initiatives in Michigan, along with a safety net hospital in Chicago’s south side.

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This article originally appeared on Sturgis Journal: Flint organization interested in Sturgis Hospital acquisition