by
Glenda Fauntleroy, DOTmed News | October 07, 2011
From the October 2011 issue of HealthCare Business News magazine
And while patients served by Gerald Champion won’t see the doors of their hospitals closed, patients served by Queen’s Peninsula Hospital may not be as fortunate. The facility’s bankruptcy plans entail shutting its doors, leaving only one hospital to care for more than 100,000 residents in the area.
A community affected
“Unfortunately, when a hospital closes, it can have a dramatic impact on a community,” says AHA’s Steinberg. “Hospitals tend to be one of the largest employers in a community, and if you’re talking about a rural community it can be the only large employer and one of the few that offers a range of jobs for various skill levels and benefits.”
According to a June report released by the AHA, hospitals employed more than 5.4 million Americans in 2009 and overall supported one out of every nine jobs in the U.S. Behind restaurants, hospitals are the second largest source of private sector jobs.
What’s more, hospitals spend about $342 billion annually on goods and services from other businesses, such as laundry and food service companies, which creates additional economic value for the community. These ripple effects help make up the $2.2 trillion in economic activity that the AHA says hospitals bring to communities across the country.
Back from the brink
It's not all doom and gloom though. Filing for bankruptcy doesn’t always equal the end for hospitals. Some struggling hospitals have managed to use Chapter 11 bankruptcy as a way to rehabilitate themselves and come back in better financial shape.
“Hospitals often are able to operate in Chapter 11 successfully,” affirms Wickouski.
A successful rehabilitation took place at New York’s Auburn Memorial Hospital, which was portrayed in last October’s DOTmed Business News for managing a financial recovery after filing for Chapter 11 in April 2007.
“Four years later and we’re still in business, and business is better than ever,” John Baran, Auburn’s CFO told DOTmed.
In April 2007, when the hospital filed for bankruptcy, its largest liability was the approximately $20 million owed to pension plans and $4 million owed to trade vendors. Baran told employees then that while it was filing for Chapter 11, the hospital—the only one in the county—would not be closing and they would not lose their jobs.
In July 2008 the hospital reached an agreement with creditors, and the court officially discharged the hospital by November of that year. Generally, it takes a hospital 12 to 18 months to emerge from bankruptcy, Baran told DOTmed.
