Washington County directs staff to pursue up to $500,000 bridge loan for Washington Regional Medical Center

The Washington County Board of Commissioners voted unanimously Dec. 18 to direct staff to work with the bankruptcy trustee and Affinity Health Partners on a potential bridge loan not to exceed $500,000 to cover payroll and essential bills at Washington Regional Medical Center (WRMC).

County Manager and County Attorney Curtis Potter told commissioners that WRMC missed payroll on Dec. 13 and that the bankruptcy trustee had asked the county to consider funding payroll while the court evaluates the hospital’s future. Potter told the board there is an unfunded hospital pension obligation the county is responsible for and provided a timeline of the hospital’s bankruptcy proceedings and recent events.

The motion, made by Commissioner Riddick and seconded by Commissioner Walker, directs staff to assemble a bridge-loan package to facilitate payroll and other critically essential bills only if First Capital agrees to subordinate its claims to Washington County and Affinity demonstrates reliable proof of financing to complete a purchase of the facility. The board carried the motion unanimously.

Affinity CEO Frank Avignone told the board that Affinity began operating WRMC on May 15 and that the facility’s cash flow problems stemmed from delayed Medicare reimbursements and licensing and billing-software issues. "We are not operated on revenue but on cost," Avignone said; he added that he had forgone his management fee for several months and had put up personal collateral to try to stabilize operations. Avignone told the board that roughly $1.6 million in Medicare funds was being held and that monthly payroll runs about $200,000.

Commissioners pressed Avignone about Affinity’s readiness and financial backing. Commissioner Riddick and Commissioner Walker said they were disappointed employees had not been paid and asked why the financial shortfall was not identified earlier. Commissioner Sexton asked about Affinity’s financial position; Avignone said Affinity was worth about $3.1 million and that First Capital holds the first lien ahead of the county.

Potter told the board the county had repeatedly requested financial details from Affinity and the trustee since September and that critical information had been scarce until the previous 24–48 hours. He outlined three options for the board to consider, including taking no action, providing an unsecured loan for several weeks of payroll and payables, or deferring to the trustee and bankruptcy court’s oversight.

The board’s approval directs staff to work with the trustee and Affinity to prepare a conditional bridge-loan package and to seek assurances that the county’s interests would be protected in bankruptcy priority. County attorneys were on the line with First Capital as the motion was approved. A bankruptcy court hearing regarding WRMC was scheduled for 10 a.m. Dec. 19 in Greenville.

Next steps: staff and county legal counsel will coordinate with the trustee, Affinity and lenders on loan terms and lien priority; the bankruptcy hearing on Dec. 19 may affect whether the bridge loan is needed or advisable.