Healthcare bankruptcies have been spiking as debt levels and interest rates rise.
Here are five updates on hospital bankruptcies since April:
1. The board overseeing Hollister, Calif.-based Hazel Hawkins Memorial Hospital is seeking to reenter Chapter 9 bankruptcy, arguing that a judge improperly tossed its case based on an "unduly narrow" view of insolvency tests while excluding its pension obligations from the analysis. The San Benito Health Care District, which oversees the 25-bed hospital, voted in May 2023 to file for bankruptcy after declaring a fiscal emergency in November 2022.
2. Dallas-based Steward Health Care in May filed for Chapter 11 bankruptcy and will receive millions in financing from Medical Properties Trust to maintain operations at existing hospitals and clinics. The for-profit health system received the green light to auction off its 31 hospitals in June and July. Steward has faced various financial challenges and liquidity issues, blaming low reimbursement from government payers and increasing costs for labor, materials and operations due to inflation. Lawmakers have been investigating Steward's financial situation in recent months amid hospital closures and vendor complaints of unpaid bills. Steward shared plans July 26 to close two of its Massachusetts hospitals — Dorchester, Mass.-based Carney Hospital and Ayer, Mass.-based Nashoba Valley Medical Center — by Aug. 31.
Read more about the ongoing saga here.
3. Eastern Niagara Hospital in Lockport, N.Y. will go up for auction a second time after it closed June 17 — Tranzon, a real estate auction franchise, will feature Eastern Niagara in an online auction from May 30 to June 6. Eastern Niagara closed after it filed for Chapter 11 bankruptcy and signed an operating agreement with Catholic Health in 2019.
4. Hicksville, Ohio-based Community Memorial Hospital, which temporarily suspended services, had its application for Chapter 9 bankruptcy rejected. The hospital suspended its services May 19. Interim CEO Bill Cherry said that over the last several months the hospital "put together a plan which we thought was the best way forward for the hospital" and filed papers for bankruptcy reorganization in April, but the tax commissioner did not accept the application.
5. Madera (Calif.) Community Hospital has been approved for a $57 million no-interest loan that will allow it to begin the reopening process. The loan was approved by the Department of Health Care Access and Information and the California Health Facilities Financing Authority through the Distressed Hospital Loan Program – established by Gov. Gavin Newsom in partnership with the state legislature.
The California Public Health Department also approved a change of management application filed by American Advanced Management for the hospital. A U.S. bankruptcy judge has approved AAM's plan to operate Madera Community Hospital in February. A timeline for when the hospital will reopen has not been released. The hospital closed in January 2023 after filing for bankruptcy.