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Springfield Hospital (Vermont) is likely to declare bankruptcy in the next month or so, interim CEO Mike Halstead said on Wednesday, Vermont Public Radio reported. The hospital has scheduled a series of information sessions around the region to update the public on the status of the organization, and at a meeting in Springfield on Wednesday Halstead said a chapter 11 filing was imminent. Springfield Hospital lost about $14 million over the past two years. The organization closed its childbirth center, laid off almost 30 staff members and made changes to its emergency department to save money. Halstead said the health care organization would still likely lose up to $3 million this year. He said the board will probably begin the bankruptcy proceedings soon to begin restructuring its finances. 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 first major test of whether states can hold drugmakers accountable for the opioid crisis is headed to an Oklahoma courtroom, the Wall Street Journal reported. In a trial starting today, lawyers for Oklahoma Attorney General Mike Hunter will argue that the marketing practices of Johnson & Johnson are to blame for widespread drug addiction that has devastated the state. The case is the first to go to trial of around 2,000 lawsuits brought by states, local municipalities and Native American tribes against pharmaceutical companies over their alleged role in fueling the opioid epidemic. The outcome is likely to help shape the sprawling litigation nationwide, as both sides look for a win to use as leverage in broader settlement talks. Hanging over the trial will be the absence of a company that initially formed the crux of the state’s case: OxyContin maker Purdue Pharma LP. The company and its owners, the Sacklers, agreed in March to pay $270 million to settle the claims and avoid trial.

Mobile medical-testing provider Trident Holding Co. is trying to emerge from bankruptcy, but it is facing the threat of continued legal trouble with the U.S. government over allegations it paid kickbacks to build its business, WSJ Pro Bankruptcy reported. A proposed chapter 11 exit plan would get the Maryland-based company out of bankruptcy in July, with a reshaped balance sheet. But in a lawsuit filed on Monday, the federal government asked for a ruling that its case won’t be erased by confirmation of Trident’s chapter 11 plan. While bankruptcy can be used to end most types of lawsuits, cases that accuse companies of defrauding the government under the False Claims Act are exempt, the government said. More than 20 states joined the federal government in the lawsuit against Trident.

Horton (Kan.) Community Hospital is taking steps to reopen after financial troubles forced it to shut down in March, Becker's Hospital Review reported. The 25-bed critical access hospital shut down after months of financial troubles. The hospital, owned by an affiliate of Kansas City, Mo.-based EmpowerHMS, was nearly 30 days behind on payroll when it closed. The hospital filed for chapter 11 protection two days after it closed, and a trustee was appointed to oversee the hospital's operations. After the hospital filed for bankruptcy, a small team of employees began working on reopening the hospital. "Since then they've been selecting management teams and finding the finances and doing some allocations of funds to get things up and running," said Horton Hospital Chief of Staff Richard Brown, MD. The hospital is tentatively set to reopen in August. Dr. Brown said that EmpowerHMS is not involved in the reopening process. 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. 

A study of hospital prices in 25 states released yesterday by the nonprofit RAND Corp. found that hospitals across the nation treating patients with private health insurance were paid on average 2.4 times the Medicare rates in 2017, the New York Times reported. The difference was largest for outpatient care, where private prices were almost triple what Medicare would have paid. In Indiana, a local hospital system, Parkview Health, charged private insurance companies about quadruple what the federal Medicare program paid for the same care. Colorado employers were shocked to learn they were paying nearly eight times what the federal government did for outpatient services like an emergency room visit, an X-ray or a checkup with a specialist at Colorado Plains Medical Center, northeast of Denver.

LifeCare Holdings, a Plano, Texas-based operator of long-term acute-care hospitals, filed for bankruptcy on Monday in U.S. Bankruptcy Court in Wilmington, Del., blaming declining Medicare rates for its need to seek chapter 11 protection, ModernHealthcare.com reported. Private-equity owned LifeCare, which operates 17 healthcare facilities in nine states, claimed that Medicare's establishment of patient criteria to qualify as a compliant long-term acute-care facility in 2015 led to reductions in reimbursement rates in 2015 and 2016, according to CEO James Murray's declaration of bankruptcy filed with the court yesterday. LifeCare also said that the number of Medicare patients who qualify for services at its hospitals has declined and resulted in an oversupply of beds. LifeCare said that it tried to address its decreasing Medicare rates and patient volume by improving its core business, adding complementary businesses to address specific diseases, closing hospitals and diversifying its revenue by acquiring home health agencies. Those home health agencies have not filed for bankruptcy. LifeCare is currently exploring a potential sale for some or all of its assets. It reported total combined long-term debt of $185 million, according to court documents. This isn't the first time LifeCare has filed for bankruptcy. The company sought chapter 11 protection in 2012 to address liquidity concerns after Hurricane Katrina and the effects of certain regulations reduced reimbursement rates and led to decreases in revenue, according to court documents. LifeCare was then bought by Hospital Acquisition, a vehicle created by its senior secured lenders, and the court dismissed its chapter 11 cases. 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. 

Astria Health, an operator of three hospitals and dozens of outpatient clinics, filed for bankruptcy Monday, saying the outsourcing of its collection work has been mired in problems and has led to a cash crunch, the Wall Street Journal reported. The nonprofit regional health-care system, which is based in Sunnyside, Wash., and generates $240 million in annual revenue, sought protection from creditors in U.S. Bankruptcy Court of Spokane and Yakima, owing more than $160 million in debt. Astria in a court filing said cash flow has been drying up since an acquisition a few years ago, when the business contracted its electronic billing and medical record system to an unnamed new vendor. That change resulted in “multiple months of bills un-submitted for payment,” Astria said in the court filing. Astria estimated its shortfall of collected cash has totaled $75 million so far and continues at a pace of $1.25 million a week.

A federal jury on Thursday found the top executives of Insys Therapeutics, a company that sold a fentanyl-based painkiller, guilty of racketeering charges in a rare criminal prosecution that blamed corporate officials for contributing to the nation’s opioid epidemic, the New York Times reported. The jury, after deliberating for 15 days, issued guilty verdicts against the company’s founder, the one-time billionaire John Kapoor, and four former executives, finding they had conspired to fuel sales of its highly potent drug, Subsys, by not only bribing doctors to prescribe their product but also by misleading insurers about patients’ need for the drug. Federal authorities last month for the first time filed felony drug trafficking charges against a major pharmaceutical distributor, Rochester Drug Cooperative, and two former executives, accusing them of shipping tens of millions of oxycodone pills and fentanyl products to pharmacies that were distributing drugs illegally. And the state attorneys general of Massachusetts and New York have recently sued not just Purdue Pharma, the maker of OxyContin, but also members of the Sackler family who own the company — and who have largely escaped personal legal penalties for the company’s role in the epidemic, culpability they deny. Also on Thursday, the state of West Virginia reached a $37 million settlement in a lawsuit against the McKesson Corporation, one of the nation’s leading drug distributors, which was accused of shipping nearly 100 million doses of opioids to residents over a six-year period. Experts said the Insys verdict could encourage other corporate prosecutions and said that it demonstrated that the public was willing to mete out penalties for high-level executives at companies profiting from the sales of highly addictive painkillers.