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Proteus Digital Health filed for chapter 11 protection yesterday, CNBC.com reported.  The Silicon Valley company develops ingestible sensors that communicate when medicines are taken, plus a wearable patch that monitors the response. At one point, the “smart pill” maker was valued at $1.5 billion according to <em>Forbes</em>.  But in recent months, it has struggled to raise additional financing, and furloughed the majority of its employees for two weeks in November 2019, CNBC previously reported. According to the filing, the company has $100 to $500 million in assets and $50 to $100 million in liabilities. It has an estimated 200 to 999 creditors, and its top creditors include PREI’s Westport Office Park ($1,035,305), Romaco North America ($510,848), Otsuka America Pharmaceutical ($397,721), Workday ($288,000) and Xceliance ($215,616). Spring Ridge Ventures owns almost all of its Series A preferred stock. The board of directors appointed Lawrence Perkins as its interim chief executive officer after a stint as a chief restructuring officer. Its former CEO Andrew Thompson is now listed on the website as a co-founder. The company has raised more than $500 million in venture capital from a mix of technology investors, family offices and pharmaceutical giants like Novartis. In 2017, it announced a partnership with Otsuka, a pharmaceutical company. As part of the deal, Otsuka invested $88 million in the company. 

A Florida investment firm is seeking a bankruptcy court’s approval to take control of the closed Ellwood City Medical Center in Lawrence County, Pa., the Pittsburgh Post-Gazette reported. With the medical center’s assets going up for sale within a month, attorneys for West Palm Beach-based Third Friday Total Return Fund yesterday asked the U.S. Bankruptcy Court for the Eastern District of Kentucky to schedule a hearing on its plan to take control of the Ellwood City Hospital parent, Americore Holdings, LLC, of Fort Lauderdale, Fla. Third Friday’s filing proposes to consolidate Americore’s debts but offers no details on its plans for Ellwood City Medical Center, and manager Mike Lewitt declined to comment yesterday. Earlier this spring, Lewitt told the Ellwood City Ledger newspaper he was committed to reopening the medical center, including its emergency department — a long-sought goal of Ellwood City leaders. Third Friday is already a major investor in Americore, a small, for-profit network of rural, financially stressed hospitals under CEO Grant White. At one point, Americore’s holdings comprised five hospitals, most based in the south, but court filings say that has been reduced to two hospitals and the now-closed Ellwood City Medical Center, which it acquired in 2017. Americore filed for bankruptcy in the Eastern Kentucky court on Dec. 31, a filing which now includes more than 600 filings for its various hospital properties. Among those filings are lien claims by both Ellwood City Borough and the Ellwood City School District against the medical center’s property for unpaid taxes and utility bills.

Faith Community Health System, a single-hospital system based in Jacksboro, Texas, refiled for bankruptcy protection June 11, about three weeks after its previous bankruptcy case was dismissed, Becker's Hospital Review reported. The health system, part of the Jack County (Texas) Hospital District, first entered chapter 9 bankruptcy in February. The bankruptcy court dismissed the case on May 26 at the request of the health system. The health system originally entered bankruptcy as a result of an arbitration award in favor of Blue Cross Blue Shield of Texas. It owes the insurer $29.3 million. After the bankruptcy case was initiated, the health system faced increased operational strain tied to the Covid-19 pandemic, according to court documents filed May 21. The health system asked the court to dismiss the bankruptcy case to allow it to apply for a Paycheck Protection Program loan through a Small Business Association lender. Small businesses with less than 500 employees are eligible for the loans, but organizations in bankruptcy are not eligible to apply. Faith Community Health System, which has about 250 employees, said it risked losing more than $2.1 million if it remained in bankruptcy. A Texas bankruptcy court granted the health system's motion to dismiss on May 26 to allow it to apply for the loan. On June 11, Faith Community Health System reentered chapter 9 bankruptcy. The health system entered bankruptcy with assets of $10 million to $50 million and liabilities within the same range, according to bankruptcy court documents. Blue Cross Blue Shield of Texas is the health system's largest unsecured creditor. Its second-largest unsecured debt is a $23.9 million bank note owed to Regional Capital Advantage, according to bankruptcy documents.

The hospitals serving New York City’s neediest and most vulnerable patients face a financial reckoning as a result of the new coronavirus outbreak and uncertain stimulus funding from Washington, D.C., officials at the institutions say, the Wall Street Journal reported. New York City’s Health + Hospitals system is running with about 18 days of cash on hand, officials say. The 11-hospital system will go lean on cash in June and July if more federal funding doesn’t begin to flow, including from the Federal Emergency Management Agency. Officials say they are holding off decisions on internal cuts or layoffs until they have a stronger sense whether more federal funding is in store. Typically, Health + Hospitals operates with a 1 percent margin, officials said. Revenue losses have been roughly $20 million a week since the outbreak began in March, but officials are hopeful they will rebound as the institutions resume elective surgeries and ambulatory care.

Nursing homes are coming under more scrutiny during the coronavirus pandemic, this time for complaints about efforts to confiscate coronavirus stimulus checks, The Hill reported. Lawmakers on both sides of the aisle are calling on the Trump administration to ensure nursing homes and assisted living facilities aren’t improperly seizing the checks from residents following alerts from the Federal Trade Commission (FTC) and state attorneys general. State and federal authorities have recently notified the public about complaints of long-term care facilities demanding residents on Medicaid turn over their relief payments. Those alerts prompted prominent lawmakers to lean on various federal agencies, urging them to investigate the issue and make it clear to facilities that they aren’t entitled to the checks. “These economic impact payments were not designed to reimburse people,” Rep. Gwen Moore (D-Wis.) told The Hill. “And we have provisions that protect the elderly.” Moore, a member of the House Ways and Means Committee, authored one of several letters to federal agencies on the nursing home issue this week. In her letter, she urged the Treasury Inspector General for Tax Administration to exercise its oversight authority to protect residents of nursing homes and assisted living facilities.

Though many wealthy health care companies that have received billions of dollars in taxpayer funds but are laying off or cutting the pay of tens of thousands of doctors, nurses and lower-paid workers, many have continued to pay their top executives millions with some taking modest pay cuts, the New York Times reported. The Times analyzed tax and securities filings by 60 of the country’s largest hospital chains, which have received a total of more than $15 billion in emergency funds through the economic stimulus package in the federal CARES Act. The hospitals — including publicly traded companies like HCA and Tenet Healthcare, nonprofits like the Mayo Clinic, and regional chains with thousands of beds and billions in cash — are collectively sitting on tens of billions of dollars of cash reserves that are supposed to help them weather an unanticipated storm. They awarded their five highest-paid officials about $874 million in the most recent year for which they have disclosed their finances. At least 36 of those hospital chains have laid off, furloughed or reduced the pay of employees as they try to save money during the pandemic. Industry officials argue that furloughs and pay reductions allow hospitals to keep providing essential services at a time when the pandemic has gutted their revenue. But more than a dozen workers at the wealthy hospitals said in interviews that their employers had put the heaviest financial burdens on front-line staff, including low-paid cafeteria workers, janitors and nursing assistants. They said pay cuts and furloughs made it even harder for members of the medical staff to do their jobs, forcing them to treat more patients in less time.

A judge has dismissed the lawsuits filed by two bankrupt Maine hospitals that haven’t been allowed to receive funds from a federal loan program aimed at propping up businesses during the coronavirus pandemic, the Bangor Daily News reported. Now, the hospitals hope that Maine’s congressional delegation may be able to find a solution to their financial challenges. In late April, Calais Regional Hospital and Penobscot Valley Hospital in Lincoln both warned that they could have to close their doors by the end of June without funds from the Paycheck Protection Program, which offers forgivable loans to help businesses keep their staff employed through the pandemic. The Small Business Administration’s interim rules for the program bar any applicants in bankruptcy proceedings from applying for the loans, which are extended by commercial banks with backing from the federal government and can be forgiven if at least three-quarters of the funds are spent on payroll and wages, among other conditions. The two hospitals have more recently found some breathing room and do not expect to immediately close, after they each received funds totaling at least $3.5 million from separate federal coronavirus stimulus programs, according to court records. Both of them are in the middle of chapter 11 bankruptcy proceedings to restructure their debts. Bankruptcy Judge Michael Fagone yesterday ruled against the hospitals in their lawsuits against the head of the Small Business Administration. Judge Fagone had previously granted a temporary restraining order against the head of the Small Business Administration allowing the hospitals to apply for the funds, but Calais Regional Hospital has had trouble finding a bank to loan the $1.8 million it’s seeking. In his 31-page ruling against the hospitals, Judge Fagone called the hospitals “particularly sympathetic,” but wrote that the Small Business Administration “made reasonable choices about how to allocate a large but finite amount of aid among struggling businesses.”

As the coronavirus pandemic upended the U.S. health-care system, EmCare IAH Emergency Physicians, a Houston staffing company owned by private equity firm KKR, made a little-noticed request of the government: It applied for a $317,379 interest-free loan, Bloomberg News reported. KKR had for years paid lobbyists to fend off efforts to ban a practice known as surprise billing used by EmCare and other providers that has driven up the cost of health care. But that didn’t stop the U.S. Health and Human Services Department from approving the loan and almost 300 others totaling more than $60 million to subsidiaries of KKR-owned companies. Shut out from many coronavirus relief programs, private equity companies have found a back door at HHS, where they have borrowed at least $1.5 billion, according to a Bloomberg News analysis of more than 40,000 loans disclosed by the department. KKR has more than $58 billion of cash to invest. Health-care facilities owned by Apollo Global Management, which started the year with about $46 billion, received at least $500 million in HHS loans. And Cerberus Capital Management’s Steward Health Care System LLC, which threatened to close a hard-hit Pennsylvania hospital, received at least $400 million in loans. Last month Cerberus was working to quadruple the size of a fund to invest in distressed loans to $750 million.

NMC Health PLC, a hospital operator based in the United Arab Emirates that collapsed amid allegations of a multibillion-dollar fraud, filed for bankruptcy protection in the U.S. and could liquidate as it faces shareholder lawsuits over its financial irregularities, the Wall Street Journal reported. The company, which does business mainly in the Middle East but also in other regions, including the U.S., was placed into administration by a U.K. court last month following the discovery of a hole in its books of more than $3 billion. NMC Health yesterday filed for chapter 15 protection in the U.S. Bankruptcy Court in Wilmington, Del. Founded by Bavaguthu Raghuram Shetty, NMC Health operates a network that includes 38 hospitals and 146 medical centers in 19 countries. The Indian-born Shetty and Emirati billionaire Khaleefa Butti Omair Yousif Ahmed al-Muhairi, formerly NMC’s executive vice chairman, resigned from the company’s board in February. The company, now overseen by three Alvarez & Marsal Europe LLP administrators, said the U.S. bankruptcy filing is intended to put a stop to collection and enforcement actions, giving it time to evaluate how to best manage its U.S. medical practices and other assets. World-wide, it has about 20,000 employees, including about 2,000 doctors.