SMCS and Springfield Hospital File Chapter 11 – Reorganization .

On June 26, 2019, Springfield Medical Care Systems (SMCS) and Springfield Hospital (SH) filed for Chapter 11 – Reorganization. The hospital and health centers will remain open and operating as usual while the organizations work through the reorganization process, which is expected to last up to 12 months, but can be shorter or longer depending on a number of factors.

Filing for Chapter 11 protection enables the hospital and health centers to continue providing high quality health care in local communities and to keep jobs in the area.

Administrators expect minimal impact on operations and staff during Chapter 11 reorganization. All employees will be paid and no layoffs are planned. Restructuring debt will allow both organizations to emerge from Chapter 11 protection on better financial footing.

“The hospital and health centers are not closing. Patient health and safety remain our top priority and we will continue to provide excellent health care to the region during the reorganization process,” said Joshua Dufresne, MBA, Acting Chief Executive Officer of SMCS.

KEY POINTS

  • The hospital and health centers are not closing.
  • Day-to-day operations will not change, staff will be paid, and patients will continue to receive high quality care in their communities.
  • Chapter 11 – Reorganization enables the hospital and health centers to continue to provide health care services in the area in the years to come.
  • Springfield Hospital and Springfield Medical Care Systems will emerge from the reorganization process on stronger financial footing.
  • Chapter 11 reorganization gives both SH and SMCS more options for partnering, collaborating, and finding the best solutions to serve the ever-changing healthcare needs of the region

PUBLIC MEETINGS

We will be holding community-wide meetings throughout July to review this situation and address questions and concerns. All meetings are open to the public.

Community meetings are scheduled for 6 pm – 7:30 pm:

July 8, 2019     Springfield, VT                         Nolin Murray Center

July 10, 2019   Bellows Falls, VT                     Rockingham Free Public Library, Community Room

July 15, 2019   Ludlow, VT                                Ludlow Town Hall, Auditorium

July 16, 2019 Londonderry, VT                        Londonderry Town Hall, South Londonderry, VT

July 18, 2019   Charlestown, NH                     Charlestown Senior Center

 

FREQUENTLY ASKED QUESTIONS

Is the hospital going to close? Will the health centers close?

No. Our goal is to ensure that hospital services and health centers continue to be available throughout the region. Chapter 11 is a debt reorganization process that occurs alongside normal day-to-day operations. We aren’t closing our doors. Patients will continue to receive care, employees will be paid, and the hospital and health centers will run normally.

Will there be layoffs?

No layoffs are currently planned during the Chapter 11 process. We continue to monitor our overall effectiveness at providing excellent care for our patients and will adjust operations as needed.

Will services be cut?

We are evaluating all aspects of our operations in order to continue to provide high quality health care to our patients and keep jobs in the area. Services will be aligned to meet the health care needs of the region.

Why do Springfield Medical Care Systems and Springfield Hospital need to file for Chapter 11 protection?

Over the past year, in spite of the numerous steps SMCS and SH have taken to operate more efficiently, a combination of local and national factors have created conditions that have made Chapter 11 reorganization a necessary step in helping to ensure the continued viability of SMCS and SH. SMCS and SH have experienced the “perfect storm” of financial factors that have contributed to significant losses, including high levels of charity care and bad debt, large claims against the self-insurance pool, inadequate reimbursements, and high-cost temporary clinicians. Fewer people are coming to the hospital and health centers with commercial insurance.

Health care is evolving: models for care delivery are changing but the reimbursement models have not evolved at the same pace.  This has contributed to a financial shortfall that has had a dramatic impact on our health care system.  The Green Mountain Care Board reports over 50% of hospitals in Vermont operated at a loss in 2018.

How long will the reorganization process last?

Approximately 12 months, however, the Chapter 11 process can be shorter or longer depending on a number of factors.

Are there other options besides filing for Chapter 11 protection?

Chapter 11 – Reorganization is a commonly used tool in the life-cycle of a business that gives a fundamentally sound organization the option of restructuring its debt. In our case, we have worked hard to get to the point where both SMCS and SH are operating efficiently enough to use Chapter 11 protection as a tool to make further operational adjustments in order to emerge from Chapter 11 in a much stronger financial position.

Chapter 11 – Reorganization protection enables the health centers and hospital to stay open, to provide high quality health care and critical services in local communities, and to keep jobs in the region.

Other options were thoroughly explored and none offered a path to long-term stability as effectively or quickly as the Chapter 11 reorganization process. SMCS and SH will have additional options moving forward once the organizations emerge from the Chapter 11 process.

Even with Chapter 11 reorganization, can the hospital afford to stay open?

Yes. Several factors are helping us improve our balance sheet and right-size expenses and revenue. We have a solid business plan in place for both SMCS and SH and fully expect to exit Chapter 11 with a stronger financial foundation that will allow SMCS and SH to serve the region for the long term.

What happens when Springfield Medical Care Systems and Springfield Hospital exit Chapter 11?

When SMCS and SH emerge from the reorganization process, they will be on much stronger financial footing. Financial health and long-term viability give both organizations many more options for partnering, collaborating, and finding the best solutions to serve the ever-changing health care needs of the region.

INFORMATION FOR VENDORS

All creditors will be receiving a formal notification of the applicable Chapter 11 case from the Bankruptcy Court, and will have the opportunity to participate in the case. The Bankruptcy Court notice will provide the name of the court, docket number of the case, the date for a meeting of creditors where anyone can appear and ask questions, and the deadline(s) to submit a proof of claim.