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Oklahoma hospital offered $23 million loan to buy itself

Great Plains Regional Medical Center in Elk City after construction was finished in 2014. [Photo by Jim Beckel, The Oklahoman Archives]

Great Plains Regional Medical Center in Elk City after construction was finished in 2014. [Photo by Jim Beckel, The Oklahoman Archives]

ELK CITY — A hospital in western Oklahoma could get more than $23 million in loans to essentially buy itself, an odd arrangement made to comply with federal rural development rules.

The U.S. Department of Agriculture announced earlier this month that it would make loans and grants worth $501 million available to rural health projects across the country.

On the seventh page of a list of agency's awards, it authorized $23.3 million to purchase Great Plains Regional Medical Center in Elk City from the Farmers Union Hospital Association. The association has owned it since the Great Depression, when the hospital's founder sold shares to farmers in the surrounding area.

Rural hospitals have been struggling in Oklahoma and across the country. A hospital in Pauls Valley closed down earlier this year after turning to crowdfunding to try to remain open, and Texas County will have to raise taxes to pay down its hospital's debt.

Corey Lively, CEO of Great Plains Regional Medical Center in Elk City, said hospital employees and patients don't have to worry about major changes if the deal goes through. The association created the new possible owner, GPRMC Holdings Inc., so it could be eligible for the loans, he said.

It isn't certain that the sale will happen, Lively said, but if it does, the same board members will oversee the hospital, and the current management will stay on board. If the loan goes through, the hospital could use it to pay down debt or make capital improvements, he said.

“There are still some things that have to fall into place,” he said.

While essentially selling a hospital to itself sounds like an odd arrangement, it's within the rules at USDA, according to an email from the department. USDA loans can't be used to refinance existing debt, but if a new entity is in charge of a hospital, it can get loans to pay off the old debt it took on.

Lively said the directors considered the loan one way to get some help with the challenges facing rural health care. The hospital is the largest employer in Elk City and is important to the surrounding area, he said.

“We know that rural health care is under assault in the United States,” he said.

Meg Wingerter

Meg Wingerter has covered health at The Oklahoman since July 2017. Previously, she lived in Topeka, Kansas, and worked at Kansas News Service and The Topeka Capital-Journal, where she earned awards for business coverage. She graduated from... Read more ›