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The nonprofit owner of St. Vincent Medical Center near downtown Los Angeles has asked a bankruptcy court for permission to shut down the facility after a bid to sell the struggling hospital fell through, the Los Angeles Times reported. Verity Health System, which announced the move yesterday, promised an orderly transfer of patients and services, including transplants and dialysis, to nearby facilities including Good Samaritan and Providence St. Joseph’s. St. Vincent reported in its bankruptcy petition that it had 1,099 employees. Verity will continue to operate St. Francis Medical Center in Lynwood, as well as Seton Medical Center and Seton Coastside in San Mateo County, which had been included in the proposed sale, the company said.Last April, a bankruptcy court approved a $610-million bid from Corona-based KPC Group to acquire the four Verity hospitals. KPC missed a closing deadline in early December, according to Verity, which has filed a lawsuit over the alleged breach, claiming “intentional and misleading conduct.” Read more. 

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A federal housing agency is close to selling a group of nursing homes it took over 18 months ago after the biggest default in the history of a government mortgage insurance program that provides critical support to the nursing home industry, the New York Times reported. The Department of Housing and Urban Development recently reached an agreement with Greystone, a New York real estate finance firm, for the chain of Chicago-area elder care facilities, according to documents obtained through a Freedom of Information Act request. The housing agency has managed the chain, Rosewood Care Centers, with the help of a court-appointed receiver since the previous owners defaulted on $146 million in government-guaranteed mortgages. The default raised questions about the department’s oversight of a decades-old mortgage insurance program that backs 15 percent of the nation’s nursing homes. Greystone is a major lender to the nursing home industry, and was servicing Rosewood’s mortgages when the former owners defaulted. HUD solicited bids for the Rosewood facilities — a dozen nursing homes and one assisted living center — until the end of May, but since then it has repeatedly declined to disclose the name of the prospective buyer or the purchase price. According to court filings, there were four bids for the properties, which the department had valued at $95 million. The department has spent nearly $30 million since August 2018 to make up for shortfalls in funding at the Rosewood facilities and to pay for repairs.

Nearly 1,000 newly minted doctors who worked at Hahnemann University Hospital spent the holidays trying to keep their medical licenses from being tarnished or lost in the collapse of the historic Philadelphia medical teaching institution, WSJ Pro Bankruptcy reported. Less than two years after being acquired by private investors, Hahnemann is defunct and says that it can’t provide insurance to protect the doctors from malpractice lawsuits arising out of their work at the downtown Philadelphia hospital. After 150 years of service to the poor and indigent, to victims of gunshots and traffic accidents, Hahnemann filed for bankruptcy in June and shut down in the fall amid waves of street protests in which nurses and doctors stood shoulder to shoulder with community advocates. Residents whose career plans were shaken up by the bankruptcy have settled into new training slots, but aftershocks continue. The malpractice insurance Hahnemann provided runs out within weeks. After that, former Hahnemann residents who practice medicine without insurance are exposed to consequences ranging from red flags on their professional records to losing their licenses, under the laws of Pennsylvania and more than a dozen other states. The doctors are scrambling to scrape up thousands of dollars to buy insurance to cover their work at Hahnemann.

Bankrupt biotechnology company Melinta Therapeutics Inc. won court approval to use its lenders’ cash to keep operating pending a possible sale of the business to health-care investment firm Deerfield Management Co., WSJ Pro Bankruptcy reported. Bankruptcy Judge Laurie Selber Silverstein said on Monday that Melinta could use cash pledged to its lenders to run its business while in chapter 11 and to “avoid irreparable harm.” Without access to the cash, Melinta would have likely been forced to liquidate, lawyers for the company said. The judge’s decision came after a contentious court hearing in which the U.S trustee — the government’s bankruptcy watchdog — and Vatera Healthcare Partners LLC, a venture-capital and private-equity investment arm of Vatera Holdings LLC and one of Melinta’s largest creditors, objected to the terms of the deal with Deerfield. The objections focused on a so-called adequate protection package that Deerfield would receive if bested at auction or if the deal failed to close by a certain date. Vatera, which says Melinta owes it about $75 million, argued that the proposed two separate $500,000 payments amounted to a breakup fee and extension fee.

Americore Health and its four affiliated hospitals in Pennsylvania, Tennessee, Missouri and Arkansas entered chapter 11 protection on Dec. 30, Becker's Hospital Review reported. The bankruptcy petitions state that three of the hospitals — Ellwood Medical Center in Ellwood City, Pa., St. Alexius Hospital in St. Louis and Izard County Medical Center in Calico Rock, Ark. — each entered bankruptcy with less than $50,000 in assets and less than $50,000 in liabilities. Pineville (Ky.) Medical Center's assets total between $1 million and $10 million, and its liabilities are within the same range, according to the bankruptcy petition. Fort Lauderdale, Fla.-based Americore's affiliate hospitals have faced financial troubles for months. Most recently, Ellwood Medical Center shut down Dec. 10, laid off 152 employees and fell behind on payroll. Read more. 

For more on hospital and health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition from the ABI Bookstore. 

The quality of care at hospitals acquired during a recent wave of deal making got worse or stayed the same, new research found, a blow to a frequently cited rationale for tie-ups, the Wall Street Journal reported. Hospital merger-and-acquisition activity has surged in recent years, with executives involved in transactions making the case that greater size will boost quality with new investments and yield other improvements as deal makers benefit from each others’ strengths. The new research, published in the New England Journal of Medicine, looked for evidence of quality gains using four widely used measures of performance at nearly 250 hospitals acquired in deals between 2009 and 2013. “Quality didn’t improve,” said Harvard University research associate Nancy Beaulieu, lead author of the study. The question of impact has become increasingly pressing as hospital deal making soared in the past decade. Hospitals announced 90 deals in 2018, a dip from the recent high of 117 transactions the prior year, but up 80% from 50 deals in 2009, according to data from Kaufman Hall, a health-care consulting firm. Figures include joint ventures and deals for minority interest. Prior studies have found higher prices follow mergers. Prices increased 6 percent after nearby hospitals merged, according to one analysis published by the Quarterly Journal of Economics in 2018. Another 2017 study found acquisitions raised prices 6 to 7 percent when competitors became rivals in new markets as deals expanded their geographic footprint. Read more. (Subscription required.) 

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The outpatient clinics associated with Springfield (Vt.) Hospital could have a plan to exit chapter 11 bankruptcy by the end of January, while the hospital itself aims to have such a plan by April, according to recent court filings, the Valley News reported. What health services will look like following the organizations’ exit from bankruptcy remains unclear, said Tom Huebner, Rutland Regional Medical Center’s former CEO, who is monitoring the process for Gov. Phil Scott’s office. “People are still working hard to make sure that patients are well served,” Huebner said yesterday. The “effort is to make sure (the) right array of services are available to patients going forward.” Springfield Hospital and Springfield Medical Care Systems — an associated, federally qualified health center — entered bankruptcy in June, aiming to craft a plan to deal with $20 million of debt, while continuing to provide medical care for community members and employment for roughly 700 people.

Biotechnology company Melinta Therapeutics Inc. has filed for chapter 11 protection, proposing to hand itself over to health-care investment firm Deerfield Management Co. in a debt-for-equity exchange that would wipe out $140 million in debt, WSJ Pro Bankruptcy reported. Venture capital-backed Melinta, one of the biggest U.S. developers of antibiotics, filed for bankruptcy on Friday in the U.S. Bankruptcy Court in Wilmington, Del., as several companies developing antibiotics have folded or are struggling to stay in business. Melinta is pursuing the debt-for-equity swap while also soliciting potential outside buyers, according to a sworn declaration filed by Chief Financial Officer Peter Milligan. The Morristown, N.J.-based maker of novel antibiotics to treat serious bacterial infections said it entered into a restructuring support agreement with Deerfield. Melinta plans to operate its business normally while it works to transfer ownership to Deerfield through the chapter 11 process. Under the proposed deal, New York-based Deerfield would acquire Melinta as a going concern, exchanging $140 million in secured debt for 100 percent of the reorganized company under a pre-negotiated chapter 11 plan.