Rare for a Hospital to Close after Bankruptcy
With debts of $33 million, Crittenden Regional Hospital filed for Chapter 7 bankruptcy protection on September 10, 2014. On that same day ,the hospital closed outright, stopping all operations, which is rare for a hospital.
The small 140 bed hospital, had employed over 400 employees and is located in West Memphis, Arkansas. When filing for Chapter 7 Bankruptcy Protection, the individual or institution in debt, allows for liquidation of all non-exempt properties. The proceeds from the sale are then distributed to the respective creditors.
Crittenden County Still Maintaining the Hospital
Despite closing in September, 2014, a trustee handling the bankruptcy said that discussions are still ongoing with two potential groups to takeover the facility. The takeover would be welcome news to many, including Crittenden County Judge Woody Wheeless. He said that since closing, the county has been paying to cover the hospital’s insurance and to maintain it. That’s $100,000 a month.
Even if the hospital is able to reopen following a takeover, it may suffer as patients have been forced to go elsewhere for services that they once counted on Crittenden Regional to provide. In a report by Arkansas Business, the lack of hospital and emergency services in Crittenden County has forced patients to drive out of state. Patients are driving across the state border from Arkansas into Tennessee, to cities like Memphis, Forrest City and Jonesboro.
Several Fires Ravaged the Facilities
During the summer of 2014, during the months of June and July, Crittenden Hospital suffered two devastating fires. The latter of the two fires destroyed large segments of the building in which the hospital did MRI’s.
To date, the Federal Insurance Company has paid out over $8.2 million to the hospital and the companies that serviced the hospital, in the aftermath of the fires.
Many companies, such as D&A Enterprises and Baldwin & Shell Construction Company, have filed claims of $2.4 million and $442,000 respectively, for their services in cleaning up the messes.
The insurance company was only sent the above mentioned claims after Crittenden announced its immediate shut down.
Weak Economy and Patient Decrease Were the Roots of the Problem
Weeks before the hospital filed for Chapter 7 protection, officials at the hospital were already giving explanations for the imminent closure and probable filing of bankruptcy.
“Despite our best efforts,” said Gene Cashman, CEO of Crittenden Regional Hospital, “The combination of challenges we’re facing, like a changing health care industry, a recovering economy and one of the toughest reimbursement climates in the nation, continues to place mounting financial pressures upon our organization.”
Hospital Has Struggled Financially For Years
“When I took over in 2012, I knew the hospital had not been doing well financially,”said Cashman. “However I was not aware of the full extent of the issues at hand.”