Hospital chain files for bankruptcy protection – Orange County Register

Citing skyrocketing labor and utility costs and delayed insurance reimbursements, a Los Angeles-based hospital chain has filed for Chapter 11 bankruptcy protection, which will impact facilities in Norwalk, Gardena, Huntington Park and East LA

Pipeline Health System LLC filed its application with the United States Bankruptcy Court for the Southern District of Texas on Sunday, October 2.

The company operates seven hospitals in three states. At the local level, these include Coast Plaza Hospital in Norwalk, Memorial Hospital of Gardena, Community Hospital of Huntington Park, and East Los Angeles Doctors Hospital.

The other two are Weiss Memorial Hospital and West Suburban Medical Center in Chicago.

keep operations running

“We intend that the restructuring process will allow our hospitals to remain open and operational in their communities while moving the hospital system into a more secure and financially sustainable position going forward,” Pipeline CEO Andrei Soran said in a statement.

The company said it has secured financial commitments to keep its operations running and will continue to pay salaries and fees while purchasing equipment and supplies needed during the bankruptcy proceedings.

Chapter 11 will provide Pipeline with the flexibility and resources needed to continue operations and care for patients while the company embarks on a long-term, sustainable path forward, officials said.

Part of the strategy will be to complete the proposed sale of the two Chicago hospitals to Resilience Healthcare, which was approved by the Illinois Health Facilities and Services Review Board on June 7.

If Resilience is unable to complete the sale, Pipeline will market the hospitals to other potential buyers. The company didn’t say how much money it expects to get from the sale.

The company said its decision to restructure its operations stemmed from industry-wide financial challenges exacerbated by the COVID-19 pandemic, including skyrocketing labor and utility costs, a reduced ability to generate revenue and delayed reimbursements from insurance plans for Patients services already rendered.

“As we move forward, our patients, team members, providers and community can expect continuous and transparent updates on our progress,” said Soran when the bankruptcy filing was announced. “It is important to know that as a result of today’s announcement, our patients will not have to reschedule appointments.”

In this photo taken on Friday, June 1, 2018, syringes of the opioid pain reliever fentanyl are shown at the in-patient pharmacy at the University of Utah Hospital in Salt Lake City. Amid the nationwide opioid epidemic, hospitals are struggling to obtain widely available injected pain relievers due to ongoing supply shortages. The bottlenecks affect almost every corner of the hospital, from the operating room to the emergency room. (AP Photo/Rick Bowmer)
Part of Pipeline Health’s reorganization strategy will include the sale of its two Chicago hospitals to Resilience Healthcare, approved June 7 by the Illinois Health Facilities and Services Review Board. (AP Photo/Rick Bowmer)

Hospitals nationwide stressed

The pandemic has taken a toll on hospital finances across the country.

More than 47 hospitals closed or went bankrupt in 2020, according to Becker’s Healthcare. And at the peak of COVID-19 hospital admissions in January 2022, about one in five hospitals reported critical staffing shortages.

A recent American Hospital Association (AHA) report states that hospitals have faced significant revenue losses and skyrocketing expenses.

“Hospitals have not received government support through the COVID-19 Provider Relief Fund to mitigate rising expenses and lost revenue during the Delta and Omicron flare-ups,” the report said. “At the same time, patient acuity, measured by how long patients have to stay in the hospital, has increased.”

Data from Kaufman Hall, a consulting firm that tracks hospital financial metrics, shows that total hospital spending increased 11% through the end of 2021 compared to pre-pandemic levels in 2019.

A big part of this is a greater reliance on traveling nurses to fill staffing shortages. In 2019, hospitals spent a median of 4.7% of their total nurse labor costs on contract nurses, according to the AHA report, but that increased to a median of 38.6% in January 2022. Hospital chain files for bankruptcy protection – Orange County Register

Dais Johnston

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