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Scripps Health wins bid for San Diego Hospice

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Scripps Health has won the right to acquire the asset for $16.55 million following a U.S. Bankruptcy Court auction against Sharp Healthcare on Tuesday.

The auction was held in the courtroom of U.S. Bankruptcy Judge Margaret Mann, who said early in the day that San Diego would be well served to have either health care provider running the facility.

Scripps, which had previously announced its intent to increase hospice care, said it plans to keep the shuttered facility as a hospice with perhaps some improvements.

The roughly 8-acre property is located at 4311 Third Ave., in a cul-de-sac overlooking Mission Valley.

For a time it appeared a disagreement over commissions might derail the proceedings, when Sharp Healthcare announced prior to the auction that brokerage firm Studley had agreed to waive its commissions on the sale.

Scripps attorney Jeffrey Cawdrey objected saying that that would give Sharp an unfair advantage.

In the end, both sides agreed that there would be no commission charged for the initial $10.7 million stalking horse bid price, but there would be a 4 percent commission for the difference between the $10.7 million and the final sales price.

San Diego Hospice. Photo courtesy of CoStar

Scripps made an initial, or stalking horse, bid of $10.7 million for the 24-bed San Diego Hospice property.

Sharp Healthcare submitted an $11 million overbid before the auction started. That action led to Scripps starting bidding at $11.05 million.

Sharp countered with an $11.2 million bid, and the auction began.

Sharp representatives occasionally asked for a recess before determining just how high it should go. In the end, the $16.55 million price was more than Sharp wanted to pay.

Exactly how much money will be left for creditors following the sale isn’t clear.

There are commissions and law firms that will need to be paid. More than $13 million in creditor claims have been identified thus far, but more may stake a claim.

The hospice filed for Chapter 11 bankruptcy protection in early February.

The number of patients that were served by the hospice mostly offsite in private homes and hospitals at one point reached more than 1,000.

The number of patients amounted to less than half that number before the facility’s closure.

Scripps Health took on about 450 hospice patients at the time and was already gaining a foothold as the bidder to beat.

The hospice started to run into difficulties at a time when its top eight employees were averaging salaries of more than $240,000 per year, as of the 2010 fiscal year, from the organization and its foundation.

During that period that ended in mid-2011, the hospice's expenses exceeded its revenues by more than $500,000.

As for what happens now, Scripps Health President Chris Van Gorder -- whose health care organization only just got into the hospice business with its acquisition of Horizon Hospice -- said the facility will be spruced up.

Van Gorder said these two acquisitions will give Scripps Health what it needs to meet the needs of an aging population.

“We have five campuses and 23 ambulatory care sites, Van Gorder said. "We’re a very large health-care system and we will grow to meet the needs of the community.”

Attorneys in the case included Jeffrey Isaacs, representing San Diego Hospice; Jeffrey Cawdrey, of Scripps Health; and Ky Lewis, who serves as Sharp Healthcare’s in-house counsel.


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Sharp Healthcare

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8695 Spectrum Center Blvd.
San Diego, CA 92123

Sharp Healthcare Executive(s):

Michael Murphy

  • Chief Executive Officer, President

Daniel Gross

  • Executive VP

Ann Pumpain

  • Chief Financial Officer, Senior Vice President

Carlisle Lewis

  • Senior Vice President, General Counsel

Alison Fleury

  • Senior Vice President, Business Development

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