A bad economy affects everyone; small businesses, large businesses, government jobs, government funded programs, everyone. Hospitals are no different. While many people look at hospitals as a public safeguard for our health, many people forget that hospitals are businesses too. And while all businesses need to at least break even to continue operating, a recent study found by the Wall Street Journal found that “more than 2,000 of the nearly 3,900 acute-care hospitals…studied don’t make a profit treating patients.”
With the economy still in trouble and many people losing their jobs and health insurance, hospitals take a major hit. If someone comes in with an emergency, say a gun shot or car accident, doctors do everything they can to save the life. You’re not asked for pre-payment or bank statements or even your insurance information. So hospital’s offer their services and are not always paid for them, especially in tough economic times. One bankruptcy attorney noted that hospitals are fighting the rising costs of healthcare as well as the decreasing “rates of reimbursement from Medicare and Medicaid…and an increasing number of uninsured patients.” Hospitals have also been facing more competitors, as same-day surgery centers and walk-in clinics have become more popular.
More and more hospitals are taking desperate measures to try to stave off bankruptcy, but with incoming lawsuits, high salaries and pensions to pay, many hospitals are seeking refuge in Chapter 11 Bankruptcy. As a Killeen and Waco bankruptcy attorney I can tell you that many hospitals are facing their troubles, but just two examples are the Hoboken University Medical Center’s operator Hudson Healthcare in New Jersey and New York’s St. Vincent Hospital.
In New Jersey, Hudson Healthcare declared bankruptcy, which is releasing their responsibility in paying the city an estimated $2 million, according to the Hudson Reporter. The bankruptcy has caused quite a bit of controversy, as the CEO, Spiros Hatiras received a $600,000 payout upon resigning while there are employees waiting on over $1.45 million in pension and health benefits.
New Jersey isn’t alone in their questionable budgeting practices. St. Vincent Hospital in New York is under investigation for fraud, as the District Attorney accused the Catholic charity hospital of purposely sinking their finances. According to the New York Post, the Hospital’s bankruptcy cleared the way to sell to a private developer. The developer planned to build a luxury community of the site. The New York Hospital also controversially paid two senior administrators $1 million each.
Unfortunately these hospitals have made some questionable decisions in their bankruptcies, but many others are struggling with operating costs and impending lawsuits. One Hospital in New Mexico is filing Chapter 11 based on the lawsuits alone. Gerald Champion Regional Medical Center is hoping that the bankruptcy will give them time to sort out the over 40 lawsuits against them.