North Philadelphia Health System files for bankruptcy

North Philadelphia Health System filed for Chapter 11 bankruptcy Dec. 30 after years of financial troubles.

NPHS, which serves some of the poorest neighborhoods in Philadelphia, took a number of steps in recent years aimed at financial improvement, such as receiving a three-year, $8.5 million revolving line of credit from Gemino Healthcare Finance in 2011 to pay off existing debt.

After finishing fiscal year 2013 with net income of $104,000, NPHS took additional steps to remain in the black. However, the system ended FY 2014 with a net loss of $1.4 million, according to a report from the Pennsylvania Health Care Cost Containment Council.

In 2015, NPHS tried to regain its financial footing. The system sold an underutilized building for $4.5 million. The sale proceeds were used to help pay down debt it incurred to finance a new emergency department at 146-bed St. Joseph's Hospital in Philadelphia, according to the Philadelphia Business Journal

Following a decision by the state to reduce financial support for NPHS for treating a high percentage of poor and uninsured residents, the system announced in December 2015 that it planned to close St. Joseph's Hospital. The hospital shut down in March 2016, affecting 675 workers.

NPHS continued to struggle financially after closing St. Joseph's, leading the system to file for bankruptcy Dec. 30. In its bankruptcy petition, NPHS listed its liabilities at between $10 million and $50 million, and the total value of its assets in the same range. The system said in its filing that it has at least 1,000 creditors.

In a motion filed Monday, NPHS asked the bankruptcy court to enter an order restraining utility companies from discontinuing services, as it requires uninterrupted utility service to treat patients. The system also asked the court for authorization to maintain employees' current wages and benefits. A hearing on that motion is scheduled for Thursday.

NPHS currently operates two facilities in Philadelphia: Girard Medical Center, a 168-bed psychiatric hospital, and Goldman Clinic, a substance abuse treatment center.

The bankruptcy case is pending in U.S. Bankruptcy Court for the Eastern District of Pennsylvania.

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