Here is a list of five hospitals that emerged from bankruptcy in 2010.
1. Tyrone (Pa.) Hospital. In June 2010, a federal bankruptcy judge approved a reorganization plan for Tyrone Hospital, allowing the facility to emerge from Chapter 11 protection by July 24, according to an Altoona Mirror report. The independent community hospital faced the possibility of closing its doors in 2006, after a Blair County jury awarded $4 million for the lifetime care of a child with cerebral palsy. The lawsuit just added to the hospital's various debts. At the time, Tyrone Hospital was also being sued by the government and former employees. Physicians feared that if the hospital were to close, patients in the Tyrone area would suffer for lack of adequate access to quality healthcare.
The hospital filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in Sept. 2006. The reorganization plan was approved in June 2010 after hundreds of court filings and hearings since the original filing.
2. Hawaii Medical Center in Oahu. Hawaii Medical Center emerged from bankruptcy in Aug. 2010 after two long years, coming out smaller, stronger and more efficient, according to a Hawaii News Now report. HMC converted from a for-profit facility to a non-profit facility in June 2010, a move that helped the hospital save on expenses like excise and property taxes. The hospital also decided to focus more on specialties such as the facility's transplant and liver centers, and hopes to re-attract staff that left the hospital after its bankruptcy filing.
Under the bankruptcy reorganization plan, HMC must pay Saint Francis healthcare system $46 million over seven years. The hospital made its first payment of almost $6 million in August.
3. Palm Drive Hospital in Sebastopol, Calif. Palm Drive Hospital exited bankruptcy in May 2010 with the sale of $11 million in bonds to pay off loans and creditors and underwrite future improvements, according to a Press Democrat report. According to hospital board president Nancy Dobbs, the sale set the stage for a "strong and stable future" for the Sebastopol facility, which was prevented from acquiring clinical equipment, applying for grants, and working with vendors "on normal business terms" for the past three years due to bankruptcy. The hospital incurred a $6 million operating loss in 2007 and filed for bankruptcy in April of that year.
Palm Drive will pay 55 cents on the dollar to credits owed more than $10,000 and 75 cents on the dollar to creditors owed less than $10,000 under a court-approved bankruptcy settlement, according to the report. With the funds from the bond sale, the hospital should be able to pay back pre-bankruptcy creditors, Sonoma County and the Sonoma County Community Foundation.
4. Johnson Memorial Corp. in Stafford Springs, Conn. The parent company of Johnson Memorial Hospital in Stafford Springs emerged from two years of bankruptcy protection in Oct. 2010, according to a Hartford Business Journal report. The company filed for bankruptcy in Nov. 2008 after the hospital's fiscal year 2009 margin of -8.48 percent made it the worst-performing acute care facility in the state.
Since Nov. 2008, the hospital has cut around 10 percent of its staff and undergone other cost-cutting measures that have added $30 million a year to its bottom line, according to the report. The hospital is now expected to report positive operating earnings. As part of the plan with creditors, the hospital will pay $9.3 million in pension obligations and rename the hospital Johnson Memorial Medical Center, according to the report. In additional to Johnson Memorial Hospital, Johnson Memorial Corp. also operates two medical groups and several outpatient clinics.
5. St. Mary's Hospital in Passaic, N.J. St. Mary's Hospital in Passaic emerged from a year-long bankruptcy in March 2010. The hospital entered Chapter 11 bankruptcy in March 2009, citing $100 million in debts, according to a report by The Record. The court-approved reorganization plan lets the hospital pay off creditors and strive to increase revenues by treating more patients and controlling costs. The hospital, which operated at about 60 percent occupancy, was tasked in March 2010 with increasing patient census and "keeping the place full," according to the report.
The hospital agreed to pay around $72,000 a month into a trust over 18 months to compensate unsecured creditors. The hospital also instituted new three-year contracts with unionized nurses, technicians and boiler operators, including restoration of pay cuts, when St. Mary's exited bankruptcy in March.
Read more on hospital turnarounds:
-Departing CEO Explains Turnaround of Hospital in North Carolina
-7 Strategies for Successful Turnarounds: Lessons Learned From Phoenix Children's Hospital
-Quincy Medical Center Achieves Turnaround Under Interim CEO
1. Tyrone (Pa.) Hospital. In June 2010, a federal bankruptcy judge approved a reorganization plan for Tyrone Hospital, allowing the facility to emerge from Chapter 11 protection by July 24, according to an Altoona Mirror report. The independent community hospital faced the possibility of closing its doors in 2006, after a Blair County jury awarded $4 million for the lifetime care of a child with cerebral palsy. The lawsuit just added to the hospital's various debts. At the time, Tyrone Hospital was also being sued by the government and former employees. Physicians feared that if the hospital were to close, patients in the Tyrone area would suffer for lack of adequate access to quality healthcare.
The hospital filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code in Sept. 2006. The reorganization plan was approved in June 2010 after hundreds of court filings and hearings since the original filing.
2. Hawaii Medical Center in Oahu. Hawaii Medical Center emerged from bankruptcy in Aug. 2010 after two long years, coming out smaller, stronger and more efficient, according to a Hawaii News Now report. HMC converted from a for-profit facility to a non-profit facility in June 2010, a move that helped the hospital save on expenses like excise and property taxes. The hospital also decided to focus more on specialties such as the facility's transplant and liver centers, and hopes to re-attract staff that left the hospital after its bankruptcy filing.
Under the bankruptcy reorganization plan, HMC must pay Saint Francis healthcare system $46 million over seven years. The hospital made its first payment of almost $6 million in August.
3. Palm Drive Hospital in Sebastopol, Calif. Palm Drive Hospital exited bankruptcy in May 2010 with the sale of $11 million in bonds to pay off loans and creditors and underwrite future improvements, according to a Press Democrat report. According to hospital board president Nancy Dobbs, the sale set the stage for a "strong and stable future" for the Sebastopol facility, which was prevented from acquiring clinical equipment, applying for grants, and working with vendors "on normal business terms" for the past three years due to bankruptcy. The hospital incurred a $6 million operating loss in 2007 and filed for bankruptcy in April of that year.
Palm Drive will pay 55 cents on the dollar to credits owed more than $10,000 and 75 cents on the dollar to creditors owed less than $10,000 under a court-approved bankruptcy settlement, according to the report. With the funds from the bond sale, the hospital should be able to pay back pre-bankruptcy creditors, Sonoma County and the Sonoma County Community Foundation.
4. Johnson Memorial Corp. in Stafford Springs, Conn. The parent company of Johnson Memorial Hospital in Stafford Springs emerged from two years of bankruptcy protection in Oct. 2010, according to a Hartford Business Journal report. The company filed for bankruptcy in Nov. 2008 after the hospital's fiscal year 2009 margin of -8.48 percent made it the worst-performing acute care facility in the state.
Since Nov. 2008, the hospital has cut around 10 percent of its staff and undergone other cost-cutting measures that have added $30 million a year to its bottom line, according to the report. The hospital is now expected to report positive operating earnings. As part of the plan with creditors, the hospital will pay $9.3 million in pension obligations and rename the hospital Johnson Memorial Medical Center, according to the report. In additional to Johnson Memorial Hospital, Johnson Memorial Corp. also operates two medical groups and several outpatient clinics.
5. St. Mary's Hospital in Passaic, N.J. St. Mary's Hospital in Passaic emerged from a year-long bankruptcy in March 2010. The hospital entered Chapter 11 bankruptcy in March 2009, citing $100 million in debts, according to a report by The Record. The court-approved reorganization plan lets the hospital pay off creditors and strive to increase revenues by treating more patients and controlling costs. The hospital, which operated at about 60 percent occupancy, was tasked in March 2010 with increasing patient census and "keeping the place full," according to the report.
The hospital agreed to pay around $72,000 a month into a trust over 18 months to compensate unsecured creditors. The hospital also instituted new three-year contracts with unionized nurses, technicians and boiler operators, including restoration of pay cuts, when St. Mary's exited bankruptcy in March.
Read more on hospital turnarounds:
-Departing CEO Explains Turnaround of Hospital in North Carolina
-7 Strategies for Successful Turnarounds: Lessons Learned From Phoenix Children's Hospital
-Quincy Medical Center Achieves Turnaround Under Interim CEO