Sturgis Hospital sold
STURGIS - Sturgis Hospital is in new hands.
Sturgis city officials said Thursday the city completed transactions Oct. 31, on a multiple-party letter agreement "releasing Sturgis Hospital Inc. from the terms of a sublease" tied to hospital improvements dating to 2004.
Completion of the transaction allowed Sturgis Hospital Inc. to finalize the terms of its acquisition by Asker Corp., including a management agreement and financial support of the hospital. That agreement will be in place until the acquisition is approved by the Michigan Attorney General’s office.
The agreement included a $3 million payment to the city in exchange for release of all obligations of Sturgis Hospital Inc. under a sublease on hospital improvements, including 10 years of remaining bond payments totaling just under $8.5 million. The agreement also provided for the release of all city liens and security interests in the hospital created as part of the sublease. The city itself continues to be responsible for remaining payments under the bond issue, and payment from the transaction will be used to offset a portion of those remaining costs.
The city partnered with the hospital nearly 20 years ago to assist financially with infraastructure improvements to the hospital. However, rising costs and fewer reimbursements led to a growing net of financial struggles.
The hospital discontinued its obstetrics department and hospice programs in 2018. The COVID-19 pandemic and low compensation from Medicaid and Medicare further contributed to the hospital's financial picture, and the facility on multiple occasions in recent months faced imminent closure.
The hospital switched to a rural emergency hospital format earlier in the year to help it become more solvent as hospital officials searched for a buyer. Inpatient services were discontinued in May as a result of the restructuring.
The agreement is between the City of Sturgis, City of Sturgis Building Authority and Sturgis Hospital Inc., as well as Asker Corp. and its subsidiary groups SH Holdco LLC and SH Management Group LLC.
City officials said at previous city commission meetings Asker intends to consider restoration and expansion of services in the coming months. The for-profit entity was one of two corporations to express interest in acquiring Sturgis Hospital, the other being Insight, a nonprofit health organization based out of Flint.
This article originally appeared on Sturgis Journal: Sturgis Hospital sold
