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Mercy Iowa City has expanded an existing employee benefit and temporarily suspended three other benefit programs as it navigates its bankruptcy process, Becker's Hospital Review reported. In a statement shared with Becker's Sept. 5, the 234-bed, financially troubled hospital said its employee assistance program expanded to provide on-site and in-person support services by trained counselors. The benefit, which is designed to help employees experiencing mental health challenges, remains available to workers at no personal cost. Temporarily suspended programs include service awards (an Awardco corporate program), the temporary assistance program, and wellness assessments, Mercy Iowa City said. Flu shots, part of the wellness program, continue to be offered to workers. The changes come as Mercy Iowa City is going through bankruptcy. The hospital filed for chapter 11 bankruptcy on Aug. 7. The filing references a letter of intent between Mercy Iowa City and the state of Iowa that outlines the plan to transition the hospital to join University of Iowa Health Care. The affiliation must be approved by the university board of regents, the state of Iowa and the bankruptcy court. 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.

A growing number of hospital operators across the country are in financial distress or have declared bankruptcy under the pressure of labor shortages and high inflation in the wake of the pandemic, WSJ Pro Bankruptcy reported. Small independent hospitals serving rural communities have been hit especially hard. More than 600, or about 30%, of all rural hospitals in the country are at risk of closing, according to the Center for Healthcare Quality and Payment Reform, a national policy center. As of August, 13 rural hospitals had shut their doors, exceeding seven and three in 2022 and 2021, respectively, according to the Cecil G. Sheps Center for Health Services Research, a unit of the University of North Carolina at Chapel Hill. Rural hospitals number about 1,800 out of roughly 6,100 total in the U.S., according to the American Hospital Association. As of August, eight hospital operators have filed for chapter 11, the highest number for the eight-month period since at least 2019, according to Gibbins Advisors, a healthcare restructuring advisory firm that keeps track of hospital filings with liabilities of more than $10 million. The sector’s troubles resurfaced after enhanced government funding during the COVID-19 pandemic dried up. Some hospitals are still on the hook to repay some of the pandemic aid, and consistently rising labor costs have been goaded by inflation, outpacing reimbursement increases. 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.

Nursing homes will have to maintain minimum staffing levels under a Biden administration proposal despite furious lobbying from the industry, which says it will be too onerous amid a continuing labor shortage, the Wall Street Journal reported. Biden administration officials said the first-ever national staffing rule would require nursing homes that participate in Medicare and Medicaid to provide a minimum of 0.55 hours of care from a registered nurse per resident a day, and 2.45 hours of care from a nurse aide per resident a day. A registered nurse would be required to be on-site at all times and nursing-home care assessments would be strengthened under the proposal. The Centers for Medicare and Medicaid Services estimates that about 75% of nursing homes would have to strengthen staffing in their facilities under the proposal. The proposed staffing standard exceeds those existing in nearly all states. The administration said it also plans to launch a national initiative to tackle the staffing shortage in the nursing-home industry. It will invest more than $75 million in financial incentives such as scholarships and tuition reimbursement to support staffing prospects for nursing homes.

Trinity Regional Hospital Sachse borrowed $68 million just three years ago to build a new, state-of-the-art facility in a fast-growing area northeast of Dallas, Bloomberg News reported. Since opening its doors in November 2021, the hospital has encountered a litany of problems. On Tuesday, it filed for bankruptcy and is searching for a buyer. Trinity Regional’s plight, exacerbated by its own missteps, follows similar trouble for health-care facilities across the U.S., including a chapter 9 petition for a hospital district in California and the announced closure of a hospital in Eugene, Oregon, home of the state’s flagship research university. The health-care sector is still struggling with the effects of staff shortages and higher costs for wages and supplies that came after the COVID-19 pandemic prompted lockdowns and health crises in early 2020. But Trinity Regional’s own mishaps compounded its troubles from the start. Trinity Regional’s owners laid out the case for a new hospital in the bond offering: a fast-growing population, a site near a new highway, a fractured market with two recent hospital closures, a plan to expand into a 20-acre medical campus including doctors’ offices and an outpatient surgery center. The hospital would differentiate itself with a “lean” structure and a “culture of speed and quality in patient care,” with 30-minute limits for tasks such as reading radiology films. It would make “minimal” use of managed care and discounted services, the prospectus said, noting that 80% of the population in the area had commercial insurance.
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.

A federal bankruptcy trustee has objected to plans by the University of Iowa to fast-track its planned $20 million purchase of Mercy Hospital-Iowa City, the Iowa Capital Dispatch reported. Faced with the possibility of involuntary receivership, Mercy filed for bankruptcy earlier this month and, at the same time, announced plans for its acquisition by the University of Iowa. The Iowa Board of Regents approved the plan, which stipulates that the university will submit an initial bid of no less than $20 million to acquire Mercy — although the final purchase price could be higher if there are competing bids. Now, however, the federal bankruptcy trustee is objecting to the speed and manner in which the proposed sale is being handled. U.S. Trustee Mary R. Jensen has formally objected to proposed orders approving the bidding procedures and authorizing the hospital to provide certain financial protections to the university as the stalking-horse bidder. In a filing with the court, Mercy’s bankruptcy trustee argues that adequate time has not been allotted for other prospective buyers to submit a bid by the Sept. 19 deadline, undermining efforts to obtain the highest purchase offer for the hospital. “That deadline does not appear to provide sufficient time for other interested bidders to conduct their due diligence and submit a competitive bid,” the trustee has told the court. The trustee also cites the current lack of any evidence of the hospital being marketed to potential buyers, which is a necessary step to justify a shortened timeframe for a sale. The trustee also argues the various protections given to the university as part of the deal could discourage competing bids. Plans for the proposed sale state that to be deemed “qualified,” a bid must be for no less than $21.3 million — an amount that’s equal to the university’s original $20 million bid amount, plus $100,000, plus a 4% breakup fee, plus $400,000 for the university’s expenses. 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.

Trinity Regional Hospital Sachse, a full-service hospital and emergency room near Dallas, filed for bankruptcy with plans to sell itself just two years after opening, Bloomberg News reported. The hospital’s parent entity listed assets of as much as $100 million and liabilities of as much as $500 million in its bankruptcy petition. The hospital is in default on nearly $70 million of municipal bonds issued in 2020, according to data compiled by Bloomberg. Hospitals — particularly those in rural areas — have suffered tremendously in recent years as they contend with higher labor costs and staffing shortages exacerbated by the pandemic. Meanwhile, rating downgrades have plagued the nonprofit medical sector as facilities continue to struggle. Trinity has been shopping itself prior to the bankruptcy filing and now that process will move into “high gear,” Nash said. The facility is brand new and boasts state-of-the-art equipment, he added. 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.

Oregon’s third-largest city is about to lose its only hospital as PeaceHealth announced last week its plan to shutter University District hospital because of underutilization, Bloomberg News reported. The hospital in Eugene, which is home to the University of Oregon, loses an average of $2 million a month, PeaceHealth, a nonprofit Catholic health system, said in a press release. The departure will leave roughly 23,000 college students without an emergency room in town. Diminishing patient volume puts a squeeze on operating margins, leaving hospitals across the nation unable to pay their bills. Fewer procedures were a factor in the decline in an index tracking the median calendar year-to-date operating margins for more than 1,300 US hospitals, according to a report by consulting firm Kaufman Hall. The index slid to 1.3% in July from 1.4% a month earlier. Should PeaceHealth receive regulatory approval, it will shutter the hospital’s 27 inpatient beds along with emergency and rehabilitation departments. It plans to shift other medical services to Sacred Heart Medical Center at RiverBend, a hospital it operates in Springfield about six miles away.

Mallinckrodt on Monday disclosed that it faces a grand jury subpoena over sales of controlled substances as it filed for bankruptcy for the second time in three years to reduce by roughly $1 billion its prior pledge to pay compensation for its alleged role in the opioid crisis, the Wall Street Journal reported. Mallinckrodt said that it received the subpoena from the U.S. Attorney’s Office for the Western District of Virginia last week, seeking data and information dating back to 2017 about the company’s reporting of suspicious controlled substances orders, chargebacks and other transactions, as well as communications between the company and the Drug Enforcement Administration regarding those issues. The company said that it is in the process of responding to the subpoena and intends to cooperate in the investigation. It said it believes it is in compliance with its obligations through its compliance program for controlled substances. Mallinckrodt’s disclosure of the subpoena came at the same time that it announced it has initiated chapter 11 proceedings Monday in the U.S. Bankruptcy Court in Delaware, with a plan to hand control to its lenders and cut its outstanding payments to a compensation trust for opioid victims.

Drugmaker Mallinckrodt said today that the company and some of its units have filed for a second bankruptcy in three years in the U.S., with the newest restructuring plan set to reduce its debt by about $1.9 billion, Reuters reported. The Ireland-based company initiated chapter 11 proceedings after reaching a debt reduction deal that would cut $1 billion from the amount it owes to victims of the opioid crisis. The company is one of the largest manufacturers of opioids. It also makes generic and branded drugs such as Acthar Gel, which is used to treat multiple sclerosis and infantile spasms. Mallinckrodt, which had also filed for bankruptcy in 2020, was a defendant in more than 3,000 lawsuits alleging that it used deceptive and misleading marketing tactics to boost its sales of highly addictive opioid drugs. After court approval, the company will have excess of $450 million of liquidity comprising cash, commitments received for $250 million in new financing from certain of its creditors, it said in a statement.