Springfield Medical Care Systems and Springfield Hospital applied for federal Paycheck Protection Program (PPP) funding -‑ a forgivable funding program introduced by the recent coronavirus stimulus bill. The program, originally created by the CARES Act, is administered through the Small Business Association and offers funding to employers with 500 or fewer employees. Amounts can be up to 2.5 times payroll costs which can be forgiven, in full or in part, depending on whether employment counts and payrolls are maintained and funds are used for permitted expenses.
SMCS and Springfield Hospital were nearing their filing of exit plans with the U.S. Bankruptcy Court for Chapter 11-Reorganization when COVID-19 struck. As with all healthcare organizations across the country, SMCS and Springfield Hospital curtailed a majority of their operations in the best interest of public safety and to minimize risk of community spread of this highly-transmittable disease. These actions had a great negative financial impact on revenues at a time when increased costs were incurred to effectively prepare for the pandemic.
The CARES Act, passed by Congress and put into law on March 27th, 2020, offered much needed financial relief to businesses negatively impacted by the coronavirus outbreak. The PPP, included in this Act, includes funding for the purpose of cash-flow assistance to prevent layoffs and business closures. It is our firm belief that SMCS and Springfield Hospital qualify for this program; and we applied for the financial assistance.
We received notice of ineligibility due to our current Chapter 11-Reorganization status. We and our legal counsel disagree with this interpretation of the law. We requested, and on May 4, 2020 the Court issued, a temporary restraining order regarding access to the CARES Act PPP funding.
In our roles as healthcare leaders, it is our responsibility to our organization, and to the communities we serve, to secure as much funding assistance as possible for this organization and for the region.
While we cannot predict the outcome with complete certainty, we remain strong in our belief that we qualify for this financial assistance — and in our determination to obtain to access the PPP funding.