By Patrick Adrian [email protected]
SPRINGFIELD, Vt. — Springfield Medical Care Systems (SMCS) and Springfield Hospital have been cleared to exit Chapter 11 bankruptcy after an 18-month process to adjust the organizations’ debt and restore their health care operations to a level of fiscal manageability.
The U.S. Bankruptcy Court for the District of Vermont confirmed Thursday the Chapter 11 reorganization plans for SMCS and Springfield Hospital, allowing the health care providers to exit bankruptcy and begin their plan to pay down their outstanding debt.
“We are very pleased with having the ability now to be exiting Chapter11 much stronger financially than we were when we began,” Springfield Hospital Interim CEO Michael Halstead told the Eagle Times on Friday. “It’s a wonderful situation to be in for both the organization and the community.”
Springfield Hospital and Springfield Medical Care Systems filed for Chapter 11 in June 2019 after the organizations accumulated $14 million in debt during the two years prior to Halstead’s arrival.
Halstead’s company, Quorum Health Resources, took over Springfield Hospital in January 2019.
Under Halstead, the hospital announced plans to reduce the hospital’s annual spending by $6.5 million to align the hospital’s operating costs with its revenues. During that time the hospital reduced its staff by 30 people, passed across-the-board pay cuts for management and hourly staff and closed the hospital’s birthing center and partnered with Brattleboro Memorial Hospital for child delivery services.
This restructuring plan was key in showing the courts that the hospital could manage its operations, services and expenses in a way to enable the hospital to generate sustainable revenue going forward, according to Halstead.
The plan expects to allow the hospital to maintain its current operations and services while paying off remaining debt to the hospital’s two major creditors. incrementally pay down its debts to its two major creditors, Centers for Medicaid and Medicare Services (CMS) and the state of Vermont.
Springfield Hospital plans to repay $4 million to CMS, who overpaid the hospital in reimbursements in 2019, over the next five years at a 2% interest rate.
The hospital will repay $5 million to the State of Vermont over the next 10 years with 2% interest.
The reorganization plan also severs the previous legal ties between Springfield Hospital and Springfield Medical Care Systems and establishes each as its own organization. However, the change in corporate structure does not expect to change the quality of patient care or partnering roles between the two entities, according to hospital officials.
“The two organizations will continue to work in close collaboration,” said Joshua Dufresne, acting chief executive officer for Springfield Medical Care Systems. “Primary care will continue to be available in the communities currently served by SMCS… Vision and dental services will also continue. The primary care network will work closely with Springfield Hospital as it has in the past, accessing a range of services including emergency care, specialty care, surgery, inpatient care and outpatient testing.”
Halstead confirmed that the hospital’s board of directors has already formed a search committee to acquire a permanent CEO for the hospital. Quorum is assisting the board in that process, which aims to fill the position by March 2021.
The hospital still hopes to forge a partnership with Dartmouth Hitchcock Medical Center and Mt. Ascutney Hospital, though those discussions have been on hold due to the ongoing pandemic, Halstead said.
The pandemic also contributed additional challenges to Springfield Hospital, both fiscally and through time delays.
Halstead said the hospital lost approximately $7-10 million in revenues during the pandemic this year, though he is optimistic that those revenues will eventually return when the pandemic eventually clears and patients are able to return for needed services.
Ultimately the hospital’s success moving forward will hinge on two factors, according to Halstead. The first is the hospital’s ability to maintain the balance between providing quality care services and sustaining the operating costs.
“The second is that we need the community to support us,” Halstead said. “We need them to continue coming to us when they need health care. If the community doesn’t use us they will lose us.”
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