Two hospital operators, a Pennsylvania Catholic health system and a Chicago safety-net hospital, filed for Chapter 11 bankruptcy protection two days apart.
Meadowbrook, Pa.-based Redeemer Health sought Chapter 11 protection Nov. 2, followed by Chicago-based Roseland Community Hospital on Nov. 4. Both said they will continue operating normally during the bankruptcy process.
The two filings share a common thread: Both organizations cited reimbursement pressure. Roseland pointed to decades of safety-net underfunding and potential Medicaid cuts under HR 1, while Redeemer named reimbursement challenges alongside rising labor and supply costs.
Redeemer Health
Redeemer filed to address financial challenges and preserve the system’s operations and mission. The Catholic system operates a 239-bed acute care hospital, a physician and provider network, outpatient and ambulatory sites, home health and hospice, three skilled nursing facilities and a range of senior living and community services.
The system cited sustained financial pressure, rising labor and supply costs, reimbursement challenges, shifting utilization and increased competition.
Redeemer said it is encouraged by support offers from “surrounding major health systems” and is working toward a path to continue the system. No agreement has been reached, and any future arrangement depends on terms and court and regulatory approvals.
The filing comes after the system defaulted on a required bond payment, according to an Oct. 8 notice posted through the Electronic Municipal Market Access system. The bonds are publicly traded, tax-exempt municipal bonds for which the system is obligated. The outstanding principal is about $87 million, and payments were due Sept. 1 and Oct 1, a Redeemer spokesperson said.
The system named Jim Logue interim CEO in late September as part of a restructuring that also saw CEO Greg Wozniak exit and CFO Kim Cummings resign. Former CFO Michael Keen has returned to the role.
Roseland Community Hospital
Roseland filed its Chapter 11 petition Nov. 4 in the U.S. Bankruptcy Court for the Northern District of Illinois, listing estimated assets and liabilities each between $10 million and $50 million, according to court documents.
The hospital said it needs to restructure debt tied to a recent medical malpractice settlement, several threatened lawsuits over service agreements, decades of underfunding for safety-net hospitals and potential Medicaid cuts under HR 1.
“This filing is intended to address debt that threatens our operations,” hospital spokesperson Nikia McGee said in a Nov. 4 news release. “It will not disrupt patient care, and it will allow us to continue serving the Greater Roseland community.”
Roseland hired Chicago-based law firm Crane, Simon, Clar & Goodman as bankruptcy counsel. It expects to submit a plan of reorganization within 120 days of the filing.
The filing comes a month after the hospital announced plans to close its labor and delivery unit by the end of October amid financial pressures. CEO Tim Egan told Becker’s in June that the hospital was fighting to remain open.
In August, the hospital submitted a “Pivot Plan” to the state that would expand behavioral health services, create a same-day surgery unit and establish a maternal-fetal home with Des Plaines, Ill.-based Maryville Academy to serve patients on Chicago’s Far South Side. The hospital said it will keep working with the state to ensure all of its grant agreements stay in compliance.
