Hospital Cites Government Cuts as Reason for Bankruptcy
With $240 million in debt, KidsPeace, the owner of a non-profit hospital in Pennsylvania, filed for bankruptcy on May 21, 2013. For years the company has been struggling with its finances and has laid off workers and missed debt payments. KidsPeace gives treatment to troubled and autistic children and runs several facilities, including the KidsPeace Psychiatric Hospital.
KidsPeace Chief Executive Officer William Isemann says the decision to file for bankruptcy is due to the $101 million in pension obligations. Last year, revenue was $119.9 million with expenses of $124.5 million. Court papers show a loss of $3.1 million.
The company will attempt to use Chapter 11 bankruptcy to reduce its bond debt and to trim back pension obligations. The current bond debt is $51.3 million and KidsPeace is looking to reduce that to $24 million.
Court papers, filed in U.S. Bankruptcy Court Eastern District in Reading, show the company was financially sound until 2008.
CEO Isemann says that many other organizations have faced increased challenges. For example, the U.S. federal and state Medicaid program cut reimbursement rates. This program, the company’s biggest source of revenue, offers health insurance to poor children.
About KidsPeace Psychiatric Hospital
The 96-bed hospital is in Orefield, Pennsylvania on the Orchard Hills Campus. It is dedicated to healing and addressing the unique mental and behavioral health care needs of kids and young adults experiencing severe crisis.
According to the hospital’s website: “With unique short-term programs tailored to children, pre-adolescents and teens and young adults ages 18-21, KidsPeace Psychiatric Hospital brings hope clients who were once considered unreachable.”
The 260 acre facility has classrooms, athletic fields and a wide range of facilities that make up the structured environment where kids feel supported and protected.
The psychiatric hospital and residential treatment center is owned by KidsPeace Corp. KidsPeace was founded as an orphanage in 1882. The company today employs more than 750 employees, including doctors, nurses and teachers. In addition to the Pennsylvania hospital, KidsPeace runs a juvenile-justice program in Minnesota and residential treatment centers in Maine and Georgia.
In the days following the bankruptcy filing, there was no mention of it on the KidsPeace Hopsital website. On the news page there were many announcements of upcoming events at the facility, including this: “We’re so very proud of the successes of our kids and our staff that we want to shout out from the rooftops. It’s our vision to “to be the premier provider of services to help kids facing crisis by offering exemplary programs, operational excellence and leadership that inspires caregivers everywhere”; to that end, we’ve helped the media with expert advice and instructional anecdotes on a variety of children’s issues throughout the year.”
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