A Growing Trend in 2014
Hospital bankruptcies in 2014 outpaced those of previous years due largely to inconsistent account payment. The successful passage of the Patient Affordable Care Act, “Obamacare,” had hospital administrators hopeful that insurance coverage would greatly reduce hospital debt by allowing patients to address illness in its early, lower-cost, stages.
While this may turn out to be true, a number of other issues led to hospital bankruptcies in 2014. They include administration mismanagement, natural disasters and patient preference for larger, urban hospitals. As you’ll see, filing for bankruptcy doesn’t necessarily mean that a hospital will be closing its doors. Here’s a look at the hospitals that declared bankruptcy in 2014, in alphabetical order:
1) Archer City Nursing Center
Archer City Nursing Center filed for Chapter 11 bankruptcy protection on December 9, 2014. The nursing center is also known as Archer Healthcare Providers. Archer City is located 140 miles north of Dallas and has 2,000 people residing there. Tax issues totaling hundreds of thousands of dollars, and competing nursing centers were listed as reasons for Archer City Nursing Center to file for bankruptcy protection. The nursing center offered all types of nursing care. This included long term care, short visits and rehabilitation sessions.
2) Casa Grande Regional Medical Center
Casa Grande Regional Medical Center filed for Chapter 11 bankruptcy in an effort to fulfill the purchase agreement it had made with Phoenix-based Banner Health. The Arizona hospital which is located 60 miles south of Phoenix cited unpaid patient bills as a reason for the sale to Banner Health. The two groups are meeting and are expecting a bankruptcy court to approve the plan. Banner signed a letter of intent in December, 2013 and has signed an asset purchase agreement.
The 177-bed Casa Grande Regional Medical Center filed for bankruptcy with $13.4 million in operating losses. In addition to unpaid bills, hospital officials blamed a declining volume of patients as the reason for its fiscal problems. Banner Health will provide interim funding to Casa Grande Regional Medical Center until the acquisition is finalized, at which point it would become Banner’s 24th acute-care hospital.
3) Craig General Hospital
The board members of Craig General Hospital, in Vinita, Oklahoma voted unanimously to file Chapter 9 bankruptcy protection. Hospital officials cited new federal laws such as required remodeling of surgical wings as one of the primary reasons for the decision. Additionally, less governmental compensation for services rendered was blamed for the hospital’s financial woes. Craig General Hospital is located in a rural part of the state and is operated by the Craig County Hospital Authority. While the hospital sought to file for bankruptcy, board members assured patrons of the medical center that full operation of hospital would continue. Employees of the hospital were told that they could expect their paychecks to continue to be paid in full.
4) C.W. Williams Health Care Center
Charlotte’s C.W. Williams Health Care Center filed for Chapter 11 bankruptcy protection on December 1, 2014. C.W. Williams has millions of dollars in debt to more than 20 creditors, with one loan being nearly $700,000. C.W. Williams Health Care Center primarily served the low income population of Charlotte. 20% of their funding comes from the federal government, and that funding continues. At the same time, the hours of operation and lists of services were severely cut back so as to ease the already waning revenue to the health care facility.
5) Gilbert Hospital
Gilbert Hospital opened in 2006, with 100 employees and 12 beds as a boutique-style emergency room hospital that guaranteed patients that they would be treated by a doctor within 31 minutes of arrival. Founder Timothy Johns, M.D. projected that the hospital would see about 25 patients a day; patient volume swelled making it one of the most profitable hospitals in the United States.
In 2013, Gilbert Hospital investors accused Johns of diverting up to $20 million in hospital funds to expand two nearby hospitals. Johns failed to meet a federal deadline for the hospital expansion, and millions of dollars of investments were left unfinished. Mismanagement of the hospital growth led to instability funding and in February, 2014 Gilbert Hospital filed bankruptcy.
6) Hutcheson Medical Center
Hutcheson Medical Center board officials voted to file for Chapter 11 bankruptcy protection on November 19, 2014. The hospital, located in the northern Georgia town of Fort Oglethorpe, owed over $60 million to creditors, including $20 million to Erlanger Health System who was contracted to manage the health care facility. Hutcheson Medical Center had scheduled several days of open meetings for the public to attend, in order to hear what public opinion had to say. Most parties present felt confident that the best move in helping with the hospital’s financial troubles was to file for bankruptcy protection.
7) Key Rehabilitation Company
Key Rehabilitation Company, a network of hospitals that spans through several mid-western and southern states, filed for Chapter 11 bankruptcy protection on October 14, 2014. Debt amounts were estimated as high as $10 million. Key Rehab has many creditors to which it owes money, with many of them being insurance companies. Key Rehabilitation Company was started in 1999 with the goal of providing comprehensive healthcare in rural parts of the country like Oklahoma and Nebraska. Key Rehab still maintains an estimated $1-$10 million in assets.
8) Long Beach Medical Center
Long Beach Medical Center, the bankrupt and Hurricane Sandy-battered hospital on Long Island’s south shore, was sold to South Nassau Communities Hospital of Oceanside on February 12, 2014 for $12 million. The plan is to renovate the hospital in order to create a 24-hour emergency department and walk-in clinic. The hospital was near bankruptcy before it shuttered it doors in preparation of the October 2012 storm, but did not reopen after Sandy destroyed its electric, communications, fire and food service systems. According to court documents, Long Beach Medical Center had accrued $48 million in debt and was unable to recover after Hurricane Sandy’s damage.
The Wall Street Journal reported that funding for the purchase came from a grant that the State of New York provided to build an urgent-care facility on the hospital grounds. The Journal reported that an additional $6 million would be granted to South Nassau Communities by the Dormitory Authority of the State of New York. Long Beach Medical received $1.5 million of the funding before the bankruptcy filing and requesting $4.5 million in the form of bankruptcy financing. Long Beach is a 162-bed teaching and community hospital built in 1922.
9) Monroe Hospital
Monroe Hospital, a 32 bed medical center in Bloomington, Indiana filed for Chapter 11 bankruptcy protection on August 12, 2014 in the Indianapolis bankruptcy court. Monroe Hospital filed for bankruptcy leaving debts over $100 million, while owning only $50 million in assets. Due to financial troubles, the hospital was unable to pay its rent from as early as 2008. Several months after the hospital went bankrupt, there was a sale approval to Prime Healthcare Services, a group that owns and runs a large network of health care facilities throughout the country.
10) Natchez Regional Medical Center
Natchez Regional Medical Center filed Chapter 9 bankruptcy in February, 2014, one month after administrators announced that the hospital had incurred more than $3 million in financial liabilities. The southwest Mississippi hospital opened in 1960 as Jefferson Davis Memorial Hospital. Its $2.4 million construction was underwritten by an $800,000 local contribution and state and federal funds.
Natchez Regional Medical Center had been financially independent since 1974 and does not receive tax support, but is backed by a standby tax that the Mississippi Development Bank required the hospital to secure in 2006 when the hospital sought a reissue of its revenue bond. Natchez Regional Medical Center filed for bankruptcy more than six months after being listed for sale, the Associated Press reported. According to hospital representatives, a sale was in negotiation at the time of the bankruptcy filing.
The Adams County Board of Supervisors is waiting for a possible sale of the hospital. Natchez Regional Medical Center serves as a referral center for five Mississippi counties and two Louisiana parishes, providing health care for more than 94,000 citizens. It is a 179-bed full service hospital offering comprehensive diagnostic and treatment services for acute and ambulatory care.
11) Nicholas County Hospital
Nicholas County Hospital has announced plans to close its doors and file Chapter 7 bankruptcy citing insurmountable financial challenges and the trend toward “larger, urban-centered hospitals” that has forced many other rural health centers to close. Nicholas County Hospital is an 18-bed hospital is located in the town of Carlisle in northeastern Kentucky and has 44 full-time and 40 part-time employees, all of whom are expected to be laid off according to hospital spokesman Stephen Scalf.
The courts are looking for opportunities to set up an ambulatory care center on the county-owned property. According to Judge-Executive Mike Pryor, several healthcare providers have expressed an interest in the space. The county will be able to replace jobs and resources once the bankruptcy process is completed, The Lexington Herald-Leader reported.
Hospital officials from Johnson Mathers Health Care Inc., the private nonprofit organization that owns Nicholas County Hospital, report that the hospital was losing more than $100,000 a month. In addition to the national trend toward larger regional medical centers, officials blame the closure on a drop in patient numbers, delayed state and federal reimbursements.
12) North Adams Regional Hospital
North Adams Regional Hospital has filed for Chapter 7 bankruptcy through its parent company, Northern Berkshire Health Systems, leaving thousands of area residents without nearby emergency services. The western Massachusetts hospital closed its doors on March 28, 2014, four days after filing bankruptcy, putting several hundred of employees out of work, and leaving thousands of residents without a nearby emergency room. The bankruptcy will lead to liquidation and sale of the hospital’s assets and dissolution of Northern Berkshire Health Systems through a court-appointed trustee. State officials filed an injunction to prevent the hospital from liquidating assets necessary to operate the emergency department.
North Adams Regional Hospital first filed for Chapter 11 bankruptcy in 2011, emerging with a court-approved reorganization plan in 2012. According to a filed report, some debtors from before 2011 have not yet been paid. Although the state court order may allow North Adams Hospital emergency services to resume under Berkshire Medical Center, the federal bankruptcy laws protect filers from creditors and lawsuits.
13) Palm Drive Hospital
Palm Drive Hospital officially closed April 28, 2014 after negotiations with the Palm Drive Health Care District failed to reach an agreement to keep the bankrupt taxpayer-subsidized hospital open. Residents of Sebastopol, California, and hospital supporters stood outside the emergency room entrance as they watched maintenance workers secure the building and post closure notices at all entrances.
The Sonoma California hospital filed two bankruptcies in the last seven years amidst huge declines in overnight patients, reduced payments from insurance companies and staggering competition from nearby hospitals. In 2010, after emerging from its previous bankruptcy, Palm Drive Hospital sold $11 million in bonds to pay off loans and creditors and to underwrite future improvements. The tax also subsidizes operating losses and pays for bonds sold in 2005 for construction and equipment.
14) Specialty Hospitals of America
Specialty Hospitals of America, a New Hampshire based nursing home and hospital conglomeration, filed Chapter 11 bankruptcy after a group of creditors filed an involuntary bankruptcy petition against the medical group’s Washington subsidiary. According to a report by The Washington Business Journal, a judge ruled that Specialty Hospitals of America owed approximately $7.5 million in Medicaid over-payments after submitting improper bills to the government from 2007 to 2010. Specialty operates 142 long-term critical care beds and 180 nursing home beds throughout Washington, D.C.
Silver Point Capital plans to loan Specialty’s D.C. subsidiary, Specialty Hospital of Washington, $15 million to continue operations during the sale of its remaining assets. In December, 2013, The Journal reported that Specialty Hospital was heading for a possible bankruptcy. Federal court filings and tax liens show that Specialty Hospital of Washington had accrued approximately $50.4 million in corporate debt, unpaid taxes and overdue utility bills. Five months later, a group of businesses including Amalgamated Capital Partners, Cropp Metcalfe, Capitol Hill Group, J-Don Enterprise and JFW Services filed a $2.7 million bankruptcy petition against Specialty.
15) St. Francis Hospital
St. Francis Hospital, the bankrupt New York hospital that closed days before its 100 year anniversary, was purchased by Westchester Medical Center on May 9, 2014. The newly named Mid Hudson Regional Hospital, Westchester Medical Center has retained 1,800 members of its hospital staff including Art Nizza, the St. Francis Hospital CEO. Although the hospital had approximately $50 million in debt, Westchester Medical offered up to $38.85 million to buy St. Francis Hospital assets, The Poughkeepsie Journal reported.
16) St. Anthony’s Hospital
St. Anthony’s Hospital, a 39-bed hospital in northeast Houston, closed on August 19, 2014, a month after filing for bankruptcy. Bankruptcy court records show that the facility’s approximately $1.5 million in asset has been overshadowed by more than $27 million in debt to creditors like First National Bank of Edinburg, the Internal Revenue Service, Opes Investments, and the Texas Workforce Commission. St. Anthony’s Hospital is owned by an investment group known as Little York Hospital of Houston.