Published in Breaking News

Deal for vacant Battle Creek rehab hospital falls through

BY Tuesday, January 05, 2016 01:16pm

BATTLE CREEK — A Pennsylvania provider of rehabilitation and long-term care still wants to enter the Michigan market after pulling out of the potential acquisition of the former Southwest Regional Rehabilitation Center facility in Battle Creek.

Citing the expiration of Southwest Regional’s state license at the end of 2015, Enola, Pa.-based Post Acute Medical LLC decided to withdraw from further consideration of the purchase.

The company could still come to the Michigan market if it finds another opportunity to pursue, said Heidi Bowie, vice president of acquisitions and facilities development for Post Acute Medical.

“We think that there’s a lot of opportunity in Michigan for services like ours. We certainly are looking to pursue other avenues, but that specific location just didn’t to come together like we hoped it would,” Bowie said. “If there’s opportunity for partnerships for new development projects for inpatient rehab facilities, certainly it’s a market that we will continue to explore.”

Post Acute Medical operates 23 rehabilitation and long-term acute care hospitals in Pennsylvania, Texas, Louisiana, Oklahoma and Wisconsin, plus 10 outpatient centers in Texas. The acquisition in Battle Creek would have given Post Acute Medical its first location in Michigan.

The 26-bed Southwest Regional Rehabilitation Hospital closed in December 2014 as it approached insolvency brought on by declining patient volumes and falling revenues that were hit hard by changes in Medicare and Medicaid reimbursement policies.

Prior to its closing, Southwest Regional was one of just three rehab-only hospitals in Michigan with Mary Free Bed Rehabilitation Hospital in Grand Rapids and the Rehabilitation Institute of Michigan in Detroit.

The Battle Creek facility had been vacant for more than a year after Southwest Regional closed, and Post Acute Medical was able to secure an extension of the state license until the end of 2015, Bowie said.

The company in November filed a certificate-of-need application to the state seeking approval for the property transfer. As it performed due diligence and as the expiration of the license neared, Post Acute Medical decided not to proceed with the project and withdrew the application.

“It was one of those deals that we needed everything to line up in just the right way for it to make sense,” Bowie said. “We just didn’t feel, based on the timing that we had to make the decision, that we were able to have everything line up the way we hoped that it would.”

The property has been on the market with an asking price of $6.8 million. CBRE | Grand Rapids, with the support of Battle Creek Unlimited, has worked to market the property, which consists of a 43,298-square-foot, two-story facility that sits within an 8.54-acre site that features a pond and nearby woods and offers room for expansion. The hospital facility itself is only about 10-years-old.

The location sits within a cluster of health care providers on Battle Creek’s north side that includes the nearby Bronson Battle Creek Hospital, Kellogg Community College’s health care programming, and The Oaks at Northpointe Woods independent and assisted living center.

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