From the October 2011 issue of HealthCare Business News magazine


St. Vincent’s Hospital is under investigation for fraud by New York’s District Attorney, who accused the hospital of sinking their finances to clear the way for sale of its site to a private developer, according to the New York Post.

However, Caroline Steinberg, vice president of Health Trends Analysis at the American Hospital Association (AHA), says the hospital bankruptcies have a lot to do with the large budget deficits saddling many states across the country, causing budget cuts in programs that can least stand the trimming.


“A lot of states are cutting Medicaid payment for providers at just the time the number of people in the Medicaid program is going up,” says Steinberg.

“While the AHA doesn’t rigorously track bankruptcies, you would expect to see more in states that have been harder hit by the economy, particularly manufacturing states such as Michigan,” she continues.

Steinberg also suggests that New Jersey and New York have been hard hit because hospitals in the area typically operate with thin profit margins so they didn’t have much of a buffer when the economy went south.

Experts also point to impending lawsuits as a chief cause of hospitals going bankrupt.

A prime example of this is what has happened at Gerald Champion Regional Medical Center in Alamogordo, N.M. The board of directors says lawsuits were to blame for the hospital filing for Chapter 11 in August.

The filing was done to protect the hospital’s ability to provide health care to the more than 70,000 patients the 99-bed acute care facility serves in the community, according to a hospital press release. Hospital officials said most of the lawsuits were filed between June and October 2010 relating to “procedures that have not been performed at the hospital for nearly three years, by physicians who no longer work at the hospital,” and all efforts to resolve the lawsuits have been unsuccessful.

“This was a difficult decision for the board, but Chapter 11 provides the hospital with a mechanism to resolve the lawsuits fairly and efficiently,” board chairman Norm Arnold said in the release. “We believe this is the most responsible way to manage this unanticipated threat to the hospital’s long-term viability so that we can fully focus on our complex mission of meeting the growing medical needs of our community.”

Hospital officials said that during the bankruptcy process, the more than 700 current employees at the hospital will continue to receive wages, salaries and benefits, and all vendors providing goods and services to the hospital after the filing will be paid in full.

October 2011 Magazine

Read more stories from the October 2011 issue

More Industry Headlines