The organizations filed for bankruptcy in June 2019 after several years of operating losses and a debt load that reached about $20 million. The organizations said the losses were due to revenue declines, increased employee costs and expanding services that were not profitable.
The bankruptcy exit plan, filed last week, hinges in large part on Vermont paying $6 million in exit funding to support the 25-bed hospital and related federally qualified health centers. About $4 million would go to the hospital and $2 million to Springfield Medical Care Systems, which has clinics in Vermont cities of Ludlow, Londonderry, Rockingham and Springfield as well as Charlestown, N.H., according to the report.
The plan also would write off about $4.7 million in unpaid taxes owed to the state.
Under the bankruptcy exit plan, Springfield Hospital and the network of federally qualified health centers will move forward as separate entities, but still plan to work collaboratively.
Springfield Medical Care Systems was established in 2009 as a parent organization to the community health center network and Springfield Hospital. The organizations joined together to share clinical and administrative services and administrative costs.
Moving forward, the two organizations will continue to tackle administrative costs jointly, but they will each pay their own portion into those costs, according to the shared services agreement filed with the court.
The organizations anticipate exiting bankruptcy by the end of the year.
Springfield Hospital’s interim CEO Mike Halsted told Valley News he anticipates revisiting talks with potential hospital partners about a need for a formal alliance when the hospital emerges from bankruptcy.
Read the full report here.
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