Boca Raton-based Promise Healthcare Group LLC, a hospital and nursing home chain, has filed for Chapter 11 bankruptcy reorganization.
In a petition filed with a Delaware bankruptcy court on Nov. 5, the company said it had debt exceeding $565 million, plus accrued and unpaid interest of $110 million, accrued expenses and accounts payable of about $94 million, and capitalized leases of about $13 million.
According to the petition, the company has hired FTI Consulting Inc. to assist in “evaluating strategic and financial alternatives to improve liquidity” and appointed FTI’s senior managing director for corporate finance and restructuring, Andrew Hinkelman, as chief restructuring officer and interim chief financial officer.
Under Chapter 11 bankruptcy, a company’s debtor remains in control of the reorganizing business as it seeks restructuring and new financing.
A statement by Hinkelman to the court said Promise Healthcare, with 4,466 employees, operates 16 acute care hospitals and two skilled nursing facilities across nine states. In Florida, Promise Healthcare operates hospitals in Miami, Fort Myers and The Villages.
“While I believe that the Debtors’ overall business is fundamentally strong, the Debtors have been operating with an unsustainable balance sheet due to current industry dynamics and certain underperforming facilities within the Debtors’ portfolio,” the statement said.
The filing seeks approval of $85 million in post-bankruptcy financing from Wells Fargo Bank, which would keep the company and its properties in operation during the restructuring process.
During the bankruptcy, the company intends to sell off two of its hospitals, in Los Angeles and St. Louis, Mo., as well as real estate in San Diego, while it negotiates sale or restructuring of its remaining assets, Hinkelman’s statement says. He added that the company intends to exit the bankruptcy in six months.
According to a 2017 Sun Sentinel story, the company was founded in 2003 by Peter Baronoff, a former Boca Raton City Council member, with the goal of offering superior care for seriously ill patients. Baronoff won the Sun Sentinel Co.’s 2016 Excalibur Award for Business Leader of the Year in Palm Beach County. He resigned as the company’s CEO early this year and resigned from the board of directors in May, Hinkelman’s statement said.
Richard Gold, the company’s president and chief operating officer, resigned in July.
While net revenue increased from $489.5 million in 2015 to $512.2 million in 2016, it declined to $462.5 million in 2017 as the company reported an operating loss of $25.2 million.
Factors contributing to the bankruptcy included sharp decreases in Medicare reimbursement rates for patient stays in 2015 and 2016, the filing states, as well as “significant” investments in new business projects that have since been abandoned.
A chain of mental health clinics in Central Florida has filed for bankruptcy amid financial troubles and after a lawsuit where employees of the chain accused management of engaging in Medicare fraud.
Sanford-based Coastal Mental Health, which has eight locations across the region, filed for Chapter 11 bankruptcy Monday declaring more than $500,000 in debt. But it was the interest rate on the debt that made it unusual — much of it was at 30 percent to 50 percent.
The company reported $4.5 million in revenue, according to bankruptcy documents. The company reported revenue of $4.8 million and a deficit of $241,000 in 2016, the last year for which its tax forms were available.
Coastal is trying to reorganize its debts after several lenders had its bank accounts frozen, said the company’s attorney, Joel Aresty. He said the filing of the bankruptcy will thaw its accounts.
“As far as I know, the clinics will remain open,” Aresty said, adding that the clinic argues the interest rates were unfair.
Aresty told the court he didn’t think the situation required a third party to oversee how Coastal’s patients’ would be cared for during the bankruptcy.
A whistleblower lawsuit alleging Medicare fraud at the chain was dismissed in December, but a judge gave the federal government permission to refile it.
Two former employees of Coastal accused management of forcing them to change diagnoses so that the chain could bill Medicaid. The federal and state governments also joined the suit as plaintiffs.
The company fought back, saying the two employees who sued were trying to damage Coastal because they started a competing business. The former employees were barred from filing a new case.
One of the plaintiffs in the suit said the firm had tried to force her to change a diagnosis that a patient suffered from substance abuse and drug dependency.
According to the suit, she had tried to refuse to prescribe the patient Xanax, after the patient admitted he was high on cocaine and also took Xanax daily, even accepting it as payment for his business.
Many local mental health clinics are experiencing more trouble getting reimbursed for care, putting stress on their finances, said Candice Crawford, CEO and president of the Mental Health Association of Central Florida.
The issues at Coastal come as the 10-year anniversary of the federal mental health parity law prompts many to say that some insurance companies are imposing stricter coverage limits for mental health and addiction treatment than for other medical conditions — even though that’s what the law was intended to prohibit.
The Chicago Tribune reported insurers are abiding by the parts of the law that prohibit charging higher deductibles or setting stricter limits on treatment frequency for behavioral health services. But they see potential violations when patients and providers are told services are not covered because they are medically unnecessary, or because that treatment is subject to pre-authorization requirements.
Such decisions are more difficult to dispute but make behavioral health services less accessible, the paper reported.
/wp-content/uploads/2020/08/florida-medical-space-logo.png00ADMIN/wp-content/uploads/2020/08/florida-medical-space-logo.pngADMIN2018-05-06 21:58:122018-05-06 21:58:12Florida Chain Of Mental Health Clinics Declares Bankruptcy
The Miami Medical Center, a 67-bed hospital that suspended patient services in October 2017, filed for Chapter 11 bankruptcy protection March 9.
Here are four things to know.
1. Leawood, Kan.-based Nueterra, along with its partners, acquired Miami Medical Center in 2014 and invested $70 million in the facility. Children’s Health Ventures, the for-profit arm of Miami-based Nicklaus Children’s Hospital, invested in Miami Medical Center with hopes of bringing a unique care model to South Florida. However, the Miami Medical Center struggled to stay afloat.
2. The hospital suspended patient services Oct. 30, 2017, and subsequently laid off its 180 employees.
3. In its bankruptcy petition, the hospital listed its assets as between $10 million and $50 million, and its liabilities as between $50 million and $100 million.
4. Miami Medical Center listed the creditors who have the largest unsecured claims against the hospital in its bankruptcy petition. According to the petition, the hospital owes about $1.2 million to Cardinal Health, $1.4 million to Aramark Healthcare Support Services and about $802,000 to Miami Anesthesia Services.
