University General Hospital, Touted in Dallas' GrowSouth Plan, Is on Life Support

Oak Cliff's University General Hospital, touted as one of Mayor Mike Rawlings' GrowSouth success stories, is on life support -- or maybe in an induced coma -- while its owners try to sell the 111-bed facility.

Houston-based University General Health Systems Inc., which purchased the former South Hampton Community Hospital two years ago, announced last week that the hospital is up for sale. In the meantime, it has scaled back operations to the minimum required to maintain its license and recently acquired Joint Commission accreditation. The emergency room is still functioning, but not much else. A hundred employees -- the number of new jobs touted on the GrowSouth website -- have been laid off.

Health system president Donald Sapaugh calls the layoffs "temporary." He has received "multiple inquiries in the past three months" from prospective buyers and predicts that someone will emerge with the vision -- and the cash -- to hang on long enough to turn a profit.

That, Sapaugh says, was his company's problem. It underestimated how much money it would take to turn around the long-struggling hospital, which has gone through two bankruptcies in recent years and was briefly forced to close about five years ago.

"We paid what we thought was a fair price for the hospital ( $30 million) at acquisition. We invested $20 million above and beyond the acquisition of the hospital, and it's taking longer than anticipated to become profitable."

The system had planned to own UGH for the long haul. Sapaugh points to the company's $50 million investment as proof of its commitment to the facility and to the Oak Cliff community, but "we can't let the flagship sink because every dollar of profitability out of Houston is being poured into Dallas."

He offers as an analogy a football team who has the ball on their own 10 yard line. Their starting quarterback and running back are injured, yet they must still drive the ball down the field for a touchdown. University General has decided it's not up to the task of leading the drive but thinks it can find someone who is. Sapaugh's analogy veers off its intended course when one pauses to realize that the most likely outcome in his scenario is a three-and-out and a punt.

There are rumors circulating in the neighborhood around UGH that the facility is going to close. Sapaugh says that's not going to happen and, given that closure would presumably come with a surrender of its license that would seriously reduce how much his company could sell it for, that seems right.

Send your story tips to the author, Eric Nicholson.

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Eric Nicholson
Contact: Eric Nicholson

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