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Evans: Brownsville General failure probable without sale

| Wednesday, Dec. 15, 2004

Brownsville General Hospital is a "hospital in peril" and faces bankruptcy and likely liquidation if the facility is not sold quickly to a for-profit corporation that wants to buy the 88-year-old facility.

CEO Mike Evans told Senior Deputy Attorney General T. Lawrence Palmer during a public hearing Tuesday at the Sons of Italy in Brownsville that a sale to TriCounty Health System is the "best and only option to save our hospital. This is a hospital in distress. We are faced with imminent bankruptcy if not liquidation. To pursue any other option at this point is too late."

The hearing attracted more than 250 people - mainly employees and residents - to hear Palmer outline the approval process and the buyers detail their plans to buy the hospital.

New owners, Evans said, would breathe new financial life into the hospital by infusing cash into the operation so the hospital can pay its $1.8 million in debts, bolster its underfunded employee pension fund and increase the number of patients.

TriCounty is one of a series of companies operated by Gary Gosai, whose two physician-brothers form the Gosai-Gandhi Medical Group along with Dr. Anant Ghandi.

Evans said the group already kept Brownsville open by loaning the hospital $200,000 plus extending a $100,000 line of credit so it could pay its liability insurance.

Banks have refused to loan the hospital money because of its deteriorating financial position, he added.

"In this business, cash is king," Evans said, "and we don't have any at this point."

After the state Attorney General's Office reviews the case, a hearing will be held in Fayette County Orphans Court for final approval.

Brownsville's patient revenue has declined while expenses have increased. Despite layoffs and shaving $2 million in expenses, the hospital "cannot cut costs fast enough to keep up with declining revenue and a declining patient base," Evans said.

"Our cash reserves are virtually zero."

Attorney Anne Mullaney, of Thorp Reed and Armstrong in Pittsburgh, outlined the deal for the hospital's sale to TriCounty. The hospital would retain ownership of the buildings and land in Redstone Township.

The real estate will be owned by Brownsville Real Estate Corp., which will lease the facility to TriCounty, which has agreed to assume all of Brownsville's current and future debts.

She said TriCounty will pay $1,050,000 to the hospital, with $1 million to be used to pay off the hospital's bills. It also will pay $100,000 into the employee pension fund.

The deal comes with an option that allows TriCounty to buy the building and lands within three to five years less any capital improvements the corporation makes. If the company decides not to purchase the real estate, TriCounty will be able to lease the hospital for $20,000 a month. If the deal isn't profitable for TriCounty, the hospital has the option to repurchase the real estate at fair market value, which currently is $4.1 million.

TriCounty is one of a number of companies - overseen by Gary Gosai - that own hotels in Pennsylvania and Georgia, High Field Imaging in Pittsburgh, Hope Pharmaceutical, Advanced Imaging and Image Radiology Group and Synergy Innovative Inc., a real estate development group. The group also operates medical clinics in Washington, Fayette and Greene counties.

"I'm one of you," Gosai said. "I am not a physician; my ambition is to put the name Brownsville on the map for quality care."

"Our goal is to make Brownsville Hospital - or whatever name it's called - so good that we don't have to ask patients where they want to go," said Dr. Kamlesh Gosai.

Brownsville Mayor Norma Ryan said losing the hospital would be another in a string of economic setbacks that have hit this community, whose downtown area is a series of boarded-up storefronts.

"We need a community hospital," she said. "It's not a matter of wanting. It's a matter of needing."

Nelda Ware, a member of the hospital's board of directors for 35 years, said the board has tried for several years to attract the University of Pittsburgh Medical Center, The Uniontown Hospital and The Washington Hospital, but none was interested.

It was during merger talks with Mon Valley that TriCounty approached the board of directors in May with a proposal.

While the employees and residents in the audience enthusiastically supported the proposed sale, neighboring hospitals asked Palmer to give the deal close scrutiny.

Attorney Edward Weisgerber, of Kirkpatrick & Lockhart in Pittsburgh, attended the hearing representing Mon Valley, Uniontown and Washington hospitals.

"The three hospitals do not oppose the transfer," he said. "These hospitals have no desire to see you fail. They sent me down here and wanted me to make that very clear. Operating a hospital is a very difficult undertaking. It's one of the most regulated businesses. Nobody wants another Monsour."

Weisgerber was referring to the recent bankruptcy filing of Monsour Medical Center in Jeannette.

"There's a lot at stake here. I hope this works. If it doesn't work, there has to be checks and balances in this deal. The track record has not been good for this hospital. There's a lot riding on this."

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