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The Hospital at Westlake Medical Center filed for chapter 11 protection Friday, the Austin American-Statesman reported, but will not be closing. "Our commitment to being a dedicated partner to our patients and community remains unwavering, both during this process and beyond," the hospital said in its information sheet about the bankruptcy. Westlake Medical Center is physician-owned and offers an outpatient surgical center, orthopedic and spine surgeries, imaging, and an emergency room. The hospital is sending out notifications to its employees, vendors, patients and physicians about the chapter 11 filing. No creditors were listed on Friday afternoon on the bankruptcy's website portal. The American Hospital Directory shows the hospital as having 23 beds, and in 2021 it had a net income of minus $2.5 million. The hospital cited the pandemic and cost increases as the reasons for the need to file for bankruptcy. "Over the past 18 months, the healthcare industry has been dramatically impacted by the ongoing economic pressures of the COVID-19 pandemic, exacerbating financial challenges for many businesses in our sector, including us," the hospital said in its information sheet. "Our operations have also been severely impacted by increasing labor, supplies, and drug costs, as well as continued workforce shortage." Read more.

The financially troubled healthcare sector will be the focus of the ABI Healthcare Program, September 18-19, 2023, in Nashville, Tenn. For more information and to register, click here.

The same day in July that Mercy Iowa City’s largest bondholder asked for a receiver to take over the hospital’s operations — a move hospital officials said compelled them to file for bankruptcy protection days later — a pair of recently terminated Mercy executives also filed suit against their former employer, accusing the hospital of ghosting them and shorting them payments that were promised, the Cedar Rapids (Iowa) Gazette reported. “Mercy Hospital has not paid the additional payments that are due and owing Miller and Andronowitz under the offer letters and severance agreements,” according to the July 24 lawsuit. “Mercy Hospital has not responded to Miller and Andronowitz’s demand for payment or provided any explanation for its continued non-payment.” Dawna Miller and Judy Andronowitz were Mercy’s chief financial officer and clinic chief operating officer, respectively, until August 2022 — around the time the hospital told employees its search for a new strategic partner had come up dry and it would remain an affiliate of Des Moines-based MercyOne. In an email dated July 28, 2022 — obtained by The Gazette — Mercy’s then-acting President and Chief Executive Officer Mike Trachta, who since has returned to his primary MercyOne position as vice president of network affiliates, announced the failed search and other staff changes. “I wanted to update you on two leaders who are leaving Mercy Iowa City,” Trachta wrote then. “I want to thank Dawna Miller and Judy Andronowitz for their contributions to our organization. Please join me in wishing them well.” A year later, both women report in their lawsuit being terminated in August 2022 and entering into severance agreements “wherein Mercy Hospital agreed, among other things, to pay the 12 months severance pay initially promised in (their) offer letters.”

When private equity firm Prospect Medical Holdings Inc. bought a cash-strapped hospital outside Philadelphia, it promised a return to profitability that would ensure the long-term sustainability of a facility that thousands of people counted on. Seven years later, Delaware County Memorial Hospital is closed, Prospect is in debt and a community group is suing, Bloomberg News reported. It’s a story playing out across the country as Wall Street’s recipe for making big bucks flipping hospitals collides with labor costs and surging interest rates. Combined with increased scrutiny on private equity tactics, ailing hospitals are finding themselves left without access to buyers of last resort. And that’s threatening to leave low-income communities without critical care such as emergency rooms. “Private equity is looking at some of these hospitals now saying, ‘I don’t know what my exit is. There’s too many unknown variables. And the one thing private equity guys don’t like is unknown variables,” said Jim Clayton, who leads the private equity advisory practice at consulting firm BDO USA. “They thought that they could pretty them up and sell them to a larger health system. But the larger systems aren’t buying them. Because they don’t want the headache either.” Private equity owns almost 400 of the approximately 5,100 hospitals — or about 30% of all for-profits — in the U.S., according to the Private Equity Stakeholder Project, with more than 100 in non-urban areas. Rural and other safety-net hospitals are most at risk of closure because they have fewer privately insured patients, and, in the case of rural facilities, lower patient volumes.
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The financially troubled healthcare sector, including the role of private equity, will be the focus of the ABI Healthcare Program, September 18-19, 2023, in Nashville, Tenn. For more information and to register, click here.

A proposed federal rule that would establish staffing requirements at nursing homes across the U.S. could push the already-troubled sector further into distress, even as the pandemic highlighted their failings, Bloomberg News reported. The Centers for Medicare & Medicaid Services said that “chronic under-staffing remains a concern,” in a Sept. 1 statement outlining the proposed rule, which includes requiring a registered nurse onsite 24 hours a day, seven days a week. About 75% of U.S. facilities would need to make adjustments under the new rule, CMS said. Nursing homes could receive a hardship extension “in limited circumstances.” Labor shortages and their associated costs still plague nursing homes, which in some cases have eliminated beds because of an absence of caretakers. That’s also created a problem for hospitals, which rely on the homes to take patients who need rehabilitation services when they’re ready for discharge. “I 100% agree that there should be adequate staffing at nursing homes,” but “this is an added cost on an already-strained sector,” said Lisa Washburn, managing director at Municipal Market Analytics. CMS estimates that the costs over 10 years to meet the mandates will be $40.6 billion.

One of the nation's largest grocery chains is the latest company to agree to settle lawsuits over the U.S. opioid crisis, the Associated Press reported. In a deal announced on Friday, the Kroger Co. would pay up to $1.4 billion over 11 years. The amount includes up to $1.2 billion for state and local governments where it operates, $36 million to Native American tribes and about $177 million to cover lawyers' fees and costs. Kroger currently has stores in 35 states — virtually everywhere save the Northeast, the northern plains and Hawaii. Thirty-three states would be eligible for money in the deal. The company previously announced settlements with New Mexico and West Virginia. Over the past eight years, prescription drug manufacturers, wholesalers, consultants and pharmacies have proposed or finalized opioid settlements totaling more than $50 billion, including at least 12 others worth more than $1 billion. The U.S. Supreme Court is set to hear arguments later this year on whether one of the larger settlements, involving OxyContin maker Purdue Pharma, is legal.

A small independent critical-access hospital in western Clinton County, Pa., with financial issues has created a GoFundMe page with a goal of $1.5 million, PennLive.com reported. The “Your Community, Your Hospital, Your Choice. Help!” fundraiser was the idea of a board member, Timothy J. Reeves, president and CEO of the Bucktail Medical Center, said Wednesday. “Not a bad idea to try,” he said was his reaction to the idea. As of Wednesday evening there had been 33 donations totaling $8,515. Reeves, as the organizer, wrote on the page the residents of western Clinton County are the owners of this facility. “If you, as owners of the facility, want the hospital to survive, we need your donation today,” he continued. “Using the facility for your healthcare needs is just as important. “If you live in any other rural area and you have healthcare available in your community, please pay attention. Your facility will be facing these same challenges soon.” There was concern last week the 16-bed hospital and 43-bed nursing home in South Renovo might have to close because there was insufficient money to meet this Friday’s payroll. That obstacle has been overcome and Reeves said he is cautiously optimistic about meeting the next payroll in two weeks. Vendors, some of whom are not being paid on time, have been cooperative, he said. Physical and occupational therapy ceased Friday when the company that provided the personnel pulled out, Reeves said.

Four creditors on Thursday filed an involuntary bankruptcy petition against the owner of the shuttered South City Hospital in south St. Louis, the St. Louis Business Journal reported. The chapter 11 petition, seeking to put SA Hospital Acquisition Group LLC in bankruptcy, says that the four have claims totaling $3.8 million. They are Matthew Haddad of Los Angeles, $2.6 million; Goldberg Healthcare Partners LLC of Beverly Hills, $535,000; Frank Saidara of Los Angeles, $110,000; and Yoel Pesso of Los Angeles, $500,000. The petition was filed in bankruptcy court in Delaware by Chicago attorney Aaron Hammer. It lists a principal place of business for SA Hospital, tied to Lawrence Feigen and Jeff Ahlholm, of Newbury Park, Calif. A California bankruptcy judge last month tossed an attempt by SA Hospital to file for bankruptcy, since the hospital is in receivership. A former nurse at the facility sued SA Hospital in August, seeking class-action status over claims that it violated federal law by failing to timely file notice of the facility's closure that month. The closure impacted 563 employees, according to the hospital's filing with the state. Read more.

The financially troubled healthcare sector will be the focus of the ABI Healthcare Program, September 18-19, 2023, in Nashville, Tenn. For more information and to register, click here.

Health-insurance costs are climbing at the steepest rate in years, walloping businesses and their workers, the Wall Street Journal reported. Costs for employer coverage are expected to surge around 6.5% for 2024, according to major benefits consulting firms Mercer and Willis Towers Watson. Willis Towers Watson projects the increase will be the biggest in more than a decade. Such a boost could add significantly to the price tag for employer plans that already average more than $14,600 a year per employee, driving up health-insurance costs that are among the biggest expenses for many American companies and a drain on families’ finances. For people who have individual insurance plans sold under the Affordable Care Act, premiums are also expected to rise by about 6% next year, according to public insurance filings analyzed by health-research nonprofit KFF, though that increase is comparable to this year’s.