New Jersey business executive Reddy Rathnaker Patlola says his company Ramco Healthcare Holdings, LLC has a letter of intent to purchase 100 percent of the real estate associated with two Chicago area community hospitals as part of a partnership with a hospital turnaround expert who will run the operations of those healthcare facilities.
As part of the proposed transaction for West Suburban Medical Center in Oak Park, IL and Weiss Hospital on Chicago’s North Side, Mr. Patlola will also be a Partner in the operating company which will be led by business partner Manoj Prasad, who has more than 20 years of successful hospital turnaround experience. The new operating company will be AUM Global Healthcare Management LLC, d.b.a. Resilience Healthcare. Prasad will serve as the chief executive officer of Resilience Healthcare.
Ramco is buying the properties from Pipeline Health System, a Los Angeles based healthcare company. The transaction needs state approval from the Illinois Health Facilities and Services Review Board.
Following the transaction, Ramco will enter into and maintain a long-term multi-year lease with Resilience for the real property to ensure Resilience can maintain operational control over the hospitals. The Transaction apportions the purchase price entirely to Ramco, (the PropCo’s) involved in the Transaction, rather than to Resilience, (the OpCo components). Most fundamentally and importantly, this apportionment reflects the fair market value of each entity. Doing so also facilitates aligning the responsibilities and obligations of long-term real estate debt, such as mortgages, with the real property, leaving the operational entities the increased flexibility to instead assume more limited working capital debt through vehicles such as revolving lines of credit. It provides a foundation for operational continuity, economic success, and increased borrowing power, if necessary.
The total purchase price is $92 million for the real estate, which includes all Pipeline assets in the greater Chicago area. No part of the purchase price is being attributed to Resilience (Weiss OpCo, West Suburban OpCo) or any other operating entity that is part of the transaction.
“We look forward to earning the approval of the Illinois Health Facilities and Services Review Board and sharing with the board our sound financial and operational plans to strengthen the viability of both hospitals,” said Patlola. “It is essential to continue the critical mission of providing healthcare services to the communities of Oak Park, Chicago’s West Side as well as Chicago’s Uptown neighborhood.”
