Illinois hospital moves to suspend services, gives employees 60-day notice of closing

https://www.beckershospitalreview.com/finance/illinois-hospital-moves-to-suspend-services-gives-employees-60-day-notice-of-closing.html

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Citing a staff shortage, Los Angeles-based Pipeline Health announced plans April 9 to suspend services at Westlake Hospital in Melrose Park, Ill. That plan was put on hold after a Cook County Circuit Court judge held that the abrupt closure could have “irreparable harm” to the community, according to the Chicago Sun Times.

In late January, Pipeline acquired Westlake Hospital and two other facilities from Dallas-based Tenet Healthcare. A few weeks after the transaction closed, Pipeline revealed plans to shut down 230-bed Westlake Hospital, citing declining inpatient stays and losses of nearly $2 million a month.

Pipeline said staffing rates have significantly declined in the weeks since it filed the application to close Westlake Hospital.

“Our utmost priority is safety and quality of patient care,” Pipeline Health CEO Jim Edwards said in an April 9 press release. “With declining staffing rates and more attrition expected, a temporary suspension of services is necessary to assure safe and sufficient operations. This action is being taken after considering all alternatives and with the best interest of our patients in mind.”

In addition to announcing the suspension of services, Pipeline also said it gave hospital employees a 60-day notice of closure, which is required by state and federal law.

Pipeline’s plan to immediately suspend services at the hospital was put on hold yesterday evening, when Judge Eve Reilly granted the village of Melrose Park a temporary restraining order to prevent the hospital from closing. The restraining order prevents Pipeline from closing the hospital, cutting services or laying off workers until after the state Health Facilities and Services Review Board considers the application to shut down the hospital on April 30, according to the Chicago Tribune.

The board could postpone the application due a pending lawsuit against Pipeline over the closure, according to the Chicago Tribune.

The village of Melrose Park sued Pipeline in March, alleging Pipeline acquired Westlake Hospital under false pretenses. The lawsuit alleges Pipeline and its owners kept their plans to shut down the hospital secret until after the transaction with Tenet closed to avoid opposition from village leaders and community members.

Pipeline recently filed a motion to dismiss the lawsuit, arguing its application for change of ownership made no promise to keep Westlake Hospital open and that the hospital’s financial troubles were not fully evident at the time the change of ownership was prepared.

“The complete impact of Westlake’s 2018 devastating net operating loss was not known until the year’s end and had not fully occurred in September 2018 when Pipeline submitted its application for change of ownership or even when that application was granted,” Pipeline said in a press release.

Pipeline said Westlake Hospital ended 2018 with a net operating loss of $14 million, and those losses are projected to worsen over time.

 

Philadelphia hospital to lay off 175 employees amid financial troubles

https://www.beckershospitalreview.com/hospital-management-administration/philadelphia-hospital-to-lay-off-175-employees-amid-financial-troubles.html?origin=cfoe&utm_source=cfoe

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Philadelphia-based Hahnemann University Hospital plans to lay off 175 nurses, support staff and managers as it struggles to keep its doors open, hospital officials told philly.com.

“We are in a life-or-death situation here at Hahnemann,” said Joel Freedman, chairman and founder of American Academic Health System, which bought Hahnemann and St. Christopher’s Hospital for Children from Dallas-based Tenet Healthcare in January 2018.

“We’re not Tenet with endless cash. We’re running out of money,” Mr. Freedman added.

He told philly.com Hahnemann won’t stay afloat without help from government, insurers and its academic partner, Philadelphia-based Drexel University.

The layoffs, which represent about 6 percent of Hahnemann’s total workforce of 2,700, reportedly affect 65 nurses, 22 service and technical employees, and 88 nonunion workers and managers.

They come as Hahnemann has struggled financially. The hospital and and St. Christopher’s combined have $600 million to $700 million in annual revenue, compared to $790 million at the time of American Academic Health System’s purchase, according to philly.com.

Mr. Freedman, who is also CEO of healthcare investment firm and American Academic Health System affiliate El Segundo-based Paladin Healthcare, partially attributed the struggles at Hahnemann to a lower volume of patients. He also cited information technology and documentation problems at the hospital.

He expects the layoffs, along with other cost-cutting initiatives, such as the closure of some primary care offices, to save Hahnemann $18 million annually.

Read the full philly.com report here.

 

 

Dr. Patrick Soon-Shiong failed to turn around Verity Health: 7 things to know about where the system stands now

https://www.beckershospitalreview.com/finance/dr-patrick-soon-shiong-failed-to-turn-around-verity-health-7-things-to-know-about-where-the-system-stands-now.html

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El Segundo, Calif.-based Verity Health filed for bankruptcy in August, just 13 months after billionaire entrepreneur Patrick Soon-Shiong, MD, bought a majority stake in its management company with a promise to revitalize the health system.

Here are seven things to know about Verity Health’s financial situation.

1. The health system filed for bankruptcy Aug. 31. It secured a $185 million loan to remain operational during the bankruptcy, which CEO Richard Adcock told Reuters could last at least a few years.

2. Verity is still seeking a buyer for all or some of the hospitals. Mr. Adcock told Reuters the system has been contacted by more than 100 potential buyers since July 9, when it announced it was exploring strategic options due to nearly $500 million in long-term debt. “We are exploring a number of options to deleverage our balance sheet and address challenges our hospitals face after a decade of deferred maintenance, poor payer contracts and increasing costs,” said Mr. Adcock.

3. The system’s financial issues pre-date Dr. Soon-Shiong’s investment but have not improved since. Mr. Adcock told Reuters that Verity has been hemorrhaging $175 million per year on cash flow basis. Verity has operated at a loss for at the least the past three years. Executives had planned to break even in the 12 months ended June 2018, however, the system reported its operating performance compared to the budget was unfavorable by $116 million, according to a report from Politico. In the 12 months ended June 2017, the system saw losses of $37 million, and the year prior marked nearly $200 million in operating losses.

4. Prior to filing for bankruptcy, Verity stopped all capital improvement projectsPolitico reported in the same article. However, the system needs millions of dollars in updates to meet California’s seismic standards by 2019. Approximately 94 percent of California’s hospitals already comply with this major legal requirement, according to the report. Verity Health needed an estimated $66 million in improvements. Since November, the system has put $5.1 million toward compliance. If Verity does not meet deadlines for compliance in 2019, its hospitals can no longer be used for patient care.

5. The health system’s spending on charity care declined 28 percent at five of its six hospitals in the first quarter of 2018, compared to the same period the year prior. The sixth hospital reported an error in its financials. Dr. Soon-Shiong updated the health system’s financial assistance policy in December to exclude services from more than 50 hospital departments, according to Politico. Preliminary data from the second quarter of 2018 suggests this trend has continued.

6. The health system is spending millions on an Allscripts EHR implementation. Dr. Soon-Shiong served as interim CEO of Verity in 2017, during which the system signed a contract to implement a new Allscripts Sunrise EHR by 2019. Verity spent $12.8 million on the EHR through June, according to Politico. Sources told Politico the final cost could range from $20 million to $100 million.

7. The EHR investment faces scrutiny due to Dr. Soon-Shiong’s close ties to Allscripts. Dr. Soon-Shiong bought a $100 million stake in Allscripts in 2015, and Allscripts had a $200 million stake in NantHealth, his precision medicine company, Politico reported. Allscripts and NantHealth also had an agreement to work together to promote precision medicine technology. This agreement was restructured in 2017, when the value of NantHealth’s stock was down, according to the report. Allscripts returned NantHealth’s stock, and in return, NantHealth transferred ownership of some of its software to Allscripts and agreed to deliver $95 million worth of business to the EHR vendor. Allscripts President Rick Poulton told Politico the Verity Health EHR deal does not count against the $95 million in promised business, and the health system had already been considering Allscripts before Dr. Soon-Shiong assumed leadership.

 

 

6-hospital Verity Health files for bankruptcy

https://www.beckershospitalreview.com/finance/6-hospital-verity-health-files-for-bankruptcy.html

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El Segundo, Calif.-based Verity Health, which operates six hospitals in Northern and Southern California and maintains ties to billionaire former surgeon Patrick Soon-Shiong, MD, filed for bankruptcy Aug. 31, Reuters reports.

Verity Health CEO Richard Adcock told Reuters he expects the system to remain in bankruptcy protection for at least a few years as it restructures and continues working with potential buyers.

The bankruptcy announcement comes on the heels of several deals that left the system with more than $1 billion in pension liabilities and bond debt. Verity Health reportedly secured a $185 million loan to remain operational.

Mr. Adcock added the system has been losing nearly $175 million per year on a cash flow basis.

In July, Verity Health revealed it is examining all strategic options, including a sale, of some or all of its hospitals. Mr. Adcock told Reuters the system has received a number of offers, including from several large national hospital operators.

Dr. Soon-Shiong, who has founded and sold several biotech companies and recently purchased the Los Angeles Times and other newspapers for $500 million, acquired Verity Health’s management company in 2017. At the time, he said his goal was to revitalize the health system, which has come to employ 6,000-plus people as of 2017.

Mr. Adcock said the health system is re-examining all of its contracts, including the management deal with Dr. Soon-Shiong, Reuters reports.

 

Tenet continues hospital sell-off spree with deals in Illinois, Texas

https://www.beckershospitalreview.com/hospital-transactions-and-valuation/tenet-continues-hospital-sell-off-spree-with-deals-in-illinois-texas.html

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Dallas-based Tenet Healthcare divested a Chicago-area hospital and sold its minority interest in four Texas hospitals.

Tenet completed the sale of MacNeal Hospital in Berwyn, Ill., and its local physician practices to Chicago-based Loyola Medicine, which is part of Livonia, Mich.-based Trinity Health. MacNeal Hospital includes 374 acute care beds, a 12-bed rehabilitation unit, a 25-bed inpatient skilled nursing facility and a 68-bed behavioral health program.

“We look forward to serving a greater number of patients through our expanded delivery network, thanks to the resources, providers and value-added care made possible by adding MacNeal Hospital and its physicians to our system,” Larry M. Goldberg, president and CEO of Loyola Medicine and Trinity Health’s Illinois region, said in a statement.

Tenet also announced the completion of several other deals on Feb. 2. The company sold its minority interest in Baylor Scott & White-Centennial in Frisco, Texas, and Baylor Scott & White-Lake Pointe in Rowlett, Texas, to Dallas-based Baylor Scott & White Health. The company transferred its minority interest in Baylor Scott & White-Sunnyvale (Texas) to Texas Health Ventures Group, which is a joint venture between Tenet’s United Surgical Partners International subsidiary and Baylor Scott & White Health. Tenet also sold its minority interest in Baylor Scott & White Medical Center-White Rock in Dallas to Pipeline Health, a hospital management company based in Manhattan Beach, Calif.

Tenet ended the fourth quarter of 2017 with a net loss of $230 million, compared to a net loss of $79 million in the same period of the year prior. To improve its financial position, Tenet launched a $250 million cost reduction initiative last year, which involves divesting hospitals in non-core markets and cutting 2,000 jobs, or about 2 percent of the company’s workforce.

Tenet’s hospital divestiture plan is expected to yield more than $1 billion of proceeds. In the first quarter of 2018, Tenet received $550 million of cash proceeds from the divestiture of MacNeal Hospital, the sale of its minority interest in the Texas hospitals and the sale of two hospitals in Philadelphia.

CHS Records $2B Loss in 4Q

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CEO Wayne Smith says the company’s turnaround is making progress, even as shareholders take it on the chin, losing nearly $18 per share in the fourth quarter of 2017.

Community Health Systems, Inc. lost more than $2 billion in the fourth quarter of 2017, nearly $18 per share, owing to converging challenges that include plummeting revenues and lower hospital volumes, the company reported.

Franklin, Tennessee–based CHS said net operating revenues for the three months ended December 31, 2017, totaled $3 billion, a 31.6% decrease, compared with $4.4 billion for the same period in 2016.

Net operating revenues for all of 2017 totaled $15.3 billion, a 16.7% decrease, compared with $18.4 billion for the same period in 2016.

Despite the sea of red ink, CHS CEO Wayne T. Smith was upbeat, and said the company’s turnaround effort is making headway.

“We are pleased with our progress in the fourth quarter and expect to carry that momentum through 2018, as we execute strategies that we believe will strengthen our core business and drive improved results,” Smith said in prepared remarks.

“During the fourth quarter, we completed our 2017 announced divestiture plan and we intend to continue to optimize our portfolio in 2018 to help pay down debt and refine our portfolio to stronger markets,” Smith said.

Smith said that for 2018, CHS remains “committed to growth initiatives to advance our competitive position, including expanding our transfer and access program across our networks, launching Accountable Care Organizations, and strategically expanding outpatient services.”

According to a filing from CHS:

  • Net operating revenues totaled more than $3 billion in the fourth quarter and were adversely impacted by a $591 million increase in contractual allowances and provision for bad debts.
  • Net loss attributable to CHS stockholders was $2 billion, or nearly $18 per share, compared with net loss of $220 million, or nearly $2 per share (diluted) for the same period in 2016.
  • Adjusted EBITDA was $409 million.
  • Cash flow from operations was $156 million, compared with $327 million for the same period in 2016.
  • Operating results for the fourth quarter reflect a 19.2% decrease in total admissions, compared with the fourth quarter of 2016. Same-hospital admissions fell 1.7% and adjusted admissions decreased .9% over the same period.
  • Operating results for all of 2017, reflect a 14% decrease in total admissions when compared with 2016.
  •  Hurricanes Harvey and Irma resulted in a $40 million loss of net operating revenues, owing to evacuations and population disruptions before the storms, and recovery efforts afterward.
  • As part of its efforts to pay down outstanding debts, CHS sold 30 hospitals in 2017, and continues to negotiate other divestitures in 2018.
  • CHS recorded non-cash impairment expense totaling $1.7 billion in the fourth quarter, from an impairment charge of $1.4 billion on the value of goodwill for the CHS’s hospital reporting unit and impairment charges of $341 million to reduce the value of assets at hospitals that CHS has sold, plans to sell, and at underperforming hospitals.

 

Tenet sees net loss swell to $230M, says $1B hospital divestiture plan is on track

https://www.beckershospitalreview.com/finance/tenet-sees-net-loss-swell-to-230m-says-1b-hospital-divestiture-plan-is-on-track.html

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Dallas-based Tenet Healthcare, which operates 74 hospitals, saw its net loss widen in the fourth quarter of 2017.

The for-profit hospital operator ended the fourth quarter of 2017 with revenues of $5 billion, up from $4.9 billion in the same period of the year prior. On a same-facility basis, patient revenue was up 6.1 percent year over year in the fourth quarter of 2017, with adjusted admissions up 1.3 percent.

After factoring in operating expenses, a $252 million write-down of the company’s deferred tax assets due to the Tax Cuts and Jobs Act, and a $22 million year-over-year increase in noncontrolling interest expense, Tenet reported a net loss of $230 million in the fourth quarter of 2017. That’s compared to the fourth quarter of 2016, when the company posted a $79 million net loss.

To improve its financial position, Tenet launched a $250 million cost reduction initiative last year, which involves divesting hospitals in non-core markets and cutting 2,000 jobs, or about 2 percent of the company’s workforce.

Tenet’s hospital divestiture plan is expected to yield more than $1 billion of proceeds. A presentation published with the company’s fourth-quarter financial results said the hospital divestiture plan is on track. Tenet sold its last two Philadelphia hospitals in January, and the company said it expects to complete the divestiture of 368-bed MacNeal Hospital in Berwyn, Ill., in March.

Tenet is also exploring the sale of Conifer Health Solutions, its healthcare business services subsidiary. The company said in December it expects to decide whether to sell Conifer during the first half of 2018.