Financially troubled East Orange (N.J.) General Hospital has filed for chapter 11 bankruptcy.
The 211-bed hospital has been struggling financially for years. In 2014, its monthly losses before interest, depreciation and amortization averaged 12 percent. Although the hospital has reduced those losses to 2 percent, its cash position is still deteriorating.
The hospital is to be acquired by Prospect Medical Holdings, a for-profit hospital chain based in Los Angeles. However, Martin Bieber, the interim CEO of EOGH, said the hospital's liquid resources have been depleted to a point that it is unable to complete the transaction without restructuring its operations.
On Wednesday, after EOGH announced it had filed for bankruptcy protection, Prospect Medical Holdings released a statement reiterating its commitment to take over the hospital. "Prospect remains highly interested in acquiring East Orange General Hospital and intends to work closely with EOGH through the bankruptcy process to complete the transaction."
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