[S]pringfield Hospital may file Chapter 11 bankruptcy as soon as June, which could leave dozens of vendors unable to recover money the hospital owes them.
Interim CEO Mike Halstead told about 50 people at a Wednesday night meeting that the organization is executing a multi-phase plan to find $6 million in annual savings. He said filing for bankruptcy is a “very serious” part of that plan.
“Some of you may be vendors providing services to the hospital,” Halstead told the audience. “The hospital may owe you a lot of money and I apologize for that.”
The meeting was the first in a series of public forums the hospital will offer in the coming week to discuss Springfield Hospital’s future.
Halstead did not say that bankruptcy was certain, but suggested there were not other viable paths forward. “The filing of a Chapter 11 bankruptcy is probably what we’ve got to do to adjust and restructure our financial world so that we can survive going into the future,” he said.
A recent audit found the organization lost about $14 million in two years. The hospital received an $800,000 loan from the state in January and has since closed the childbirth center, eliminated 27 positions and made pay cuts across the organization to find savings.
The board is expected to vote to move forward with Chapter 11 in June.
“We’re trying to gear all of our efforts to try to maintain health care for this community,” Halstead said. “We’re going to have to do the tough things we … have to do.”
Halstead said the hospital currently owes about $6.5 million to 75 vendors, which is down from about $9 million owed a few months ago.
“It’s a substantial amount of money,” Halstead said.
Some audience members were concerned that filing for bankruptcy could impact area health centers.
The organization has a loan from Berkshire Bank for both Springfield Hospital and Springfield Medical Care Systems, which includes nine federally-qualified health centers (FQHCs) in Ludlow, Londonderry, Rockingham, Springfield and Charlestown, New Hampshire.
It’s unclear if the health centers would be tied to the hospital in bankruptcy courts.
“There’s some negotiation that’s going to have to take place,” Halstead said. “The FQHC has to be set up so it can survive on its own … so it can come out of a Chapter 11 bankruptcy.”
While the financial situation is being worked out, Halstead said the organization is also struggling with patient and employee satisfaction.
The number of patients dropped about 7 percent from March to April, Halstead said. More than 100 employees have also left the organization since pay cuts were announced in February. Halstead said salaries have been restored to entice people to stay, or come back.
With all the financial strain, Halstead said the hospital likely won’t be able to go forward as an individual entity.
“We’re probably going to need to partner with somebody,” Halstead said. “We need a partner that has more resources.”
Discussions with Dartmouth-Hitchcock-Medical Center started in the winter, but Halstead said those conversations are moving slowly.
“They’ve got an awful lot on their plate,” Halstead said. “It’s hard to get their attention.”
Halstead is working under a management firm called Quorum Health Corp., which was brought to Springfield to right the organization’s financial ship. Quorum’s six-month contract, which ends in June, will likely be extended.
“There’s a part for all of you to play,” Halstead said as he stood in front of the audience. “You have to support the hospital.”
