A bankruptcy reorganization begun by Saint Vincent”™s Catholic Medical Centers (SVCMC) of New York will not affect hospital and clinic operations and services in Westchester County, a SVCMC spokesman in Manhattan said last week.
In U.S. Bankruptcy Court in White Plains last week, federal Judge Adlai S. Hardin Jr. approved a disclosure statement filed by attorneys for the New York City-based medical group and the debtors”™ plan to restructure operations and finances and pay off its creditors. Creditors will have until July 18 to vote on the reorganization plan before a July 27 confirmation hearing scheduled by U.S. Bankruptcy Judge Hardin.
Those creditors had registered about $3.85 billion in outstanding claims as of late January, according to court documents filed by SVCMC attorneys.
Of the total, medical malpractice claims account for slightly more than $3 billion. General unsecured claims of $328,506,791 make up the next largest class.
SVCMC is expected to emerge from bankruptcy this summer, said spokesman Michael Fagan. SVCMC has proposed to do that with a term loan of at least $250 million and an accounts-receivable credit line of at least $50 million.
The medical group filed for Chapter 11 protection nearly two years ago in the midst of what SVCMC officials called a “severe liquidity crisis.”
A nonprofit corporation formed in 2000 by the merger of several Catholic diocesan hospitals, SVCMC reported a $143 million operating loss in 2004, court documents show. In five years from the merger to the bankruptcy filing, SVCMC had a total $370 million in operating losses.
SVCMC officials attributed the financial crisis in part to declining volumes of hospital patients as more patients receive walk-in care and lengths of hospital stays are reduced; flat or declining Medicare and Medicaid reimbursements and overall medical costs rising faster than inflation. Adding to the revenue shortfall, in 2004 SVCMC provided more than $104 million in charity care to uninsured New Yorkers.
From 1999 to 2004, hospital malpractice insurance premiums rose 147 percent, SVCMC officials noted. Those costs, coupled with large jury awards for medical malpractice claims, have been “a significant burden” on the medical group.
SVCMC officials said New York hospitals overall have experienced a steady decline in net income while net income has steadily risen for managed-care companies in New York, which in 2002 recorded the highest net profits of any state in the country. In that year, private health plans in New York had approximately $1.2 billion in net income, compared with a net income loss of $428 million for hospitals in the state, according to state agency reports.
SVCMC operates St. Vincent”™s Westchester, a 133-bed hospital at 275 North St. in Harrison. Founded by the Sisters of Charity in 1879, it provides care for mental-health and substance-abuse patients. St. Vincent”™s Westchester runs outpatient centers in the Bronx, Port Chester and in Tuckahoe at the Maxwell Institute, which offers chemical-dependency treatment and education services.
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“St. Vincent”™s Westchester has traditionally had a positive contribution margin to the overall bottom line for the organization,” Fagan said. “They have been largely unaffected by the reorganization. There never has been an effect on operations in Westchester.”
Since the bankruptcy filing, SVCMC has either closed or sold five hospitals in Brooklyn, Queens and Staten Island that long operated at substantial losses and is in the process of selling its School of Allied Health Professions and nursing schools in Queens and on Staten Island.
Fagan said SVCMC”™s Westchester facilities will not be shed in the restructuring: “St. Vincent”™s Westchester is an important part of the organization going forward.”
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