%1

As Orianna Health Systems LLC’s hard-fought chapter 11 case draws nearer to a close, interest in the case turned yesterday to fees for lawyers that have steered the bankruptcy through months of contentious litigation, WSJ Pro Bankruptcy reported. During a hearing at the U.S. Bankruptcy Court in Dallas, Orianna’s landlord and chief antagonist throughout much of its bankruptcy, Omega Healthcare Investors Inc., said attorneys for Orianna and the nursing-home operator’s unsecured creditors shouldn’t immediately be paid for work done earlier in the case. Orianna, once the operator of more than 40 nursing homes in seven states, filed for bankruptcy in March with a prearranged restructuring deal, which Omega voted to support. But a clash over how much of the plan’s expenses would be borne by Omega caused the deal to fall apart, and the two sides have since become adversaries. Omega, a publicly traded real-estate investment trust, now says that for months lawyers from DLA Piper pursued a debt-restructuring plan that wasn’t in line with the bankruptcy code. Court papers show DLA Piper is currently seeking approval and payment of about $2.2 million in fees. Working with DLA Piper, Orianna has since modified its restructuring plan and is pressing forward with it. Bankruptcy Judge Harlin DeWayne Hale ruled on Tuesday that the new version of the plan doesn’t significantly impact Omega, which limits its options for contesting it. A final hearing on the plan is set for Jan. 8. Read more.

Examine how current challenges facing the health care industry will lead to future opportunities. Don't miss ABI's “Disruption, Consolidation and Innovation in the Health Care Industry” Program scheduled for January 17 at Georgetown University Law Center. Register here. 

Promise Healthcare Group, a hospital and nursing home chain based in Boca Raton, Fla., filed for chapter 11 protection Nov. 4, Becker's Hospital Review reported. The company is now seeking final approval of an $85 million loan to support operations while it tries to sell its assets. The loan package from Wells Fargo is a "necessary bridge" to help cement the sales, Andrew Hinkelman, chief restructuring officer and interim CFO of Promise Healthcare Group, said in bankruptcy court documents filed Nov. 9. Promise and more than 40 of its affiliates entered bankruptcy after years of financial troubles. In bankruptcy court documents, Promise reported more than $565 million in combined debt. Promise and its affiliates currently operate two short-term acute care hospitals, 14 long-term acute care hospitals and two skilled-nursing facilities. Read more. 

Examine how current challenges facing the health care industry will lead to future opportunities. Don't miss ABI's “Disruption, Consolidation and Innovation in the Health Care Industry” Program scheduled for January 17 at Georgetown University Law Center. Register here. 

The nonprofit University Physician Group, the Wayne State University School of Medicine's faculty practice, has filed for chapter 11 protection and is seeking to get out of leases in suburban locations to concentrate on downtown Detroit, Crain's Detroit Business reported. The medical practice, which employs 873 people, says in court documents filed Wednesday and yesterday in U.S. Bankruptcy Court in Detroit that it plans to continue operating, move its corporate administrative functions to Midtown Detroit and focus on being the "premier academic clinical practice" for the Detroit Medical Center. "This is not a liquidation or a closure — quite the opposite. UPG will remain in operation and focused on delivering outstanding clinical care while supporting the academic mission of the WSU School of Medicine," UPG CEO Charles Shanley, M.D., said in a message to Wayne State employees. The filing comes several weeks after UPG reached a deal to continue its relationship with DMC, which is owned by the for-profit Tenet Healthcare Inc. The filing says that over the past decade UPG's number of physicians has declined by 50 percent, which has hurt clinical revenue and made its leased network of suburban offices untenable. It plans to use chapter 11 to suspend operations at all suburban sites, it says in court documents. The filing seeks bankruptcy court approval to reject the leases the practice no longer can support.

MiMedx Group Inc. said yesterday that the Nasdaq Stock Market will delist its shares and suspend trading in the stock effective today, the Wall Street Journal reported. A formerly highflying maker of tissue grafts and biologic implants used in wound care and sports medicine, MiMedx had warned in July that a Nasdaq delisting was possible. In June, MiMedx said an internal investigation had found that its reported financial results dating back to 2012 were no longer reliable and would have to be restated. The company fired its CEO and Chairman Parker “Pete” Petit for cause and recovered compensation it had previously paid to him over the years. The restatement continues to be a challenge for the company. MiMedx informed Nasdaq last week that it would need to review revenue recognition practices on all company sales. Earlier this year, a Wall Street Journal investigation found that MiMedx, once one of the fastest-growing health-care companies, had fueled much of its growth by recording more product sales to facilities operated by the Veterans Health Administration than were actually used by those entities, a practice known as channel stuffing. The Journal also reported that MiMedx didn’t offer certain lower-cost products to government-run hospitals, increasing taxpayers’ costs.

Hospitals are often thought of as the hubs of our health care system. But hospital closings are rising, particularly in some communities, the New York Times reported. “Options are dwindling for many rural families, and remote communities are hardest hit,” said Katy Kozhimannil, an associate professor and health researcher at the University of Minnesota. Beyond the potential health consequences for the people living nearby, hospital closings can exact an economic toll, and are associated with some states’ decisions not to expand Medicaid as part of the Affordable Care Act. Since 2010, nearly 90 rural hospitals have shut their doors. By one estimate, hundreds of other rural hospitals are at risk of doing so. In its June report to Congress, the Medicare Payment Advisory Commission found that of the 67 rural hospitals that closed since 2013, about one-third were more than 20 miles from the next closest hospital. A study published last year in Health Affairs by researchers from the University of Minnesota found that over half of rural counties now lack obstetric services. Another study, published in Health Services Research, showed that such closures increase the distance pregnant women must travel for delivery. Read more.

Examine how current challenges facing the health care industry will lead to future opportunities. Don't miss ABI's “Disruption, Consolidation and Innovation in the Health Care Industry” Program scheduled for January 17 at Georgetown University Law Center. Register here. 

Generic pharmaceutical company Lannett Co. is exploring “a range of alternatives” for its debt structure as it copes with price-fixing lawsuits and the loss of a key supply deal, WSJ Pro Bankruptcy reported. Lannett said Monday that it has engaged law firm Kirkland & Ellis LLP and financial adviser Lazard Ltd. to “more closely analyze financing options” following the termination of a distribution contract that brought in $253 million in net sales during the company’s last fiscal year. Last month, Lannett said that its exclusive distribution agreement with Jerome Stevens Pharmaceuticals Inc. wouldn’t be renewed past next March, resulting in a $340 million asset write-down. JSP was Lannett’s primary supplier of finished goods. The Philadelphia-based drug distributor expects to remain in compliance with its debt covenants through June 30, the end of its current fiscal year, Chief Executive Tim Crew said in a statement. Lannett stock fell 21 percent to close at $3.75. Lannett creditors are owed roughly $772 million in long-term debt, according to securities filings.

Bankrupt hospital operator Verity Health System of California Inc. got access to a $185 million loan that company representatives said will keep their six struggling facilities open until they find buyers to take over the operations, WSJ Pro Bankruptcy reported. Bankruptcy Judge Ernest Robles on Wednesday approved the nonprofit health care provider to spend the full amount of the loan extended by Ally Bank. The company, which employs roughly 7,400 people, filed for bankruptcy on Aug. 31, saying it doesn’t have enough money to upgrade its record-keeping system and buy more than $100 million of necessary medical equipment. The loan approval came despite protests from lawyers who represent a group of bondholders owed $461 million, who argued that Verity Health System officials rejected a cheaper borrowing deal they had offered. Bondholders also worried that the fine print of the bankruptcy loan would make it harder for them to get money from the planned sale of the hospitals.