Saint Vincent Catholic Medical Centers Files for Bankruptcy Protection
04/21/2006
-- Chapter 11 Filing Allows Healthcare System to Function Throughout Reorganization --
Media Contact: Michael Fagan
Saint Vincent Catholic Medical Centers
Phone: 212-604-7505
New York, NY, July 5, 2005 - Saint Vincent Catholic Medical Centers, the largest Catholic healthcare provider in New York State, has filed a Chapter 11 bankruptcy petition with the U.S. Bankruptcy court for the Southern District of New York.
Throughout the Chapter 11 process, Saint Vincent Catholic Medical Centers' facilities, programs and services will continue their normal operations. It is a reorganization process that will enable the system to deal with its debt, rationalize its operations, and better meet changing healthcare needs. Saint Vincent Catholic Medical Centers intends to emerge from the bankruptcy process and continue to provide healthcare services to its communities.
Saint Vincent Catholic Medical Centers consists of seven hospitals located throughout Brooklyn, Queens, Manhattan, and Staten Island, along with four nursing homes and a home health care agency. The bankruptcy filing will not include three of its nursing homes -- Bishop Mugavero, Holy Family Home, and St. Elizabeth Ann's Healthcare and Rehabilitation -- along with St. Vincent's Midtown Hospital, because each operates as a separate corporate entity. Saint Vincent Catholic Medical Centers is a mission driven organization and access point to some of the most sophisticated medical care in New York. It also provided more than $104 million in charity care to the uninsured and poor in 2004.
The goal of the bankruptcy filing is to bring Saint Vincent Catholic Medical Centers' costs, including its debt, in line with its revenues. A bankruptcy filing will give the system the time and means to restructure its debt, operations and finances to continue its mission of Catholic healthcare in New York.
'Due to operating losses, debt levels, cash flow and accounts payable issues, and a severe liquidity crisis, Saint Vincent Catholic Medical Centers voluntarily chose bankruptcy protection at this time,' said David Speltz, president and CEO of Saint Vincent Catholic Medical Centers. 'During this process, our hospitals, nursing homes and home health care agency remain open and operating as usual. The system will retain its excellent physicians, maintain nursing levels for high quality care, and make capital investments in plant and equipment.'
A Chapter 11 process consists of several steps, including the following:
* During the bankruptcy proceeding, Saint Vincent Catholic Medical Centers will continue to function;
* An 'automatic stay' immediately goes into effect, which prohibits, among other things, all actions by creditors against Saint Vincent Catholic Medical Centers to collect debt obligations incurred prior to the filing;
* Saint Vincent Catholic Medical Centers will prepare a 'plan of reorganization' for presentation to various stakeholders in the process;
* Saint Vincent Catholic Medical Centers' creditors will vote to accept or reject the plan of reorganization;
* The court will approve the plan of reorganization; and
* Saint Vincent Catholic Medical Centers will emerge as a reorganized healthcare system.
Throughout this process, daily operations will continue; employees will be paid, hospital and patient services will continue; and suppliers will be paid for goods and services received after the filing date.
In response to its growing financial crisis, SVCMC initiated a turnaround plan in 2004, under the leadership of Speltz & Weis, LLC. To date, substantial improvements have been made, particularly in the revenue cycle process and the rebuilding of operational infrastructure.
However, one consequence of the system's operating losses and resulting cash flow problems was an ongoing accounts payables issue that created both financial and operational obstacles. The turnaround initiative has been effective in working towards matching SVCMC's revenues with its expenses, but it cannot address the overwhelming debt that the system has accrued since its inception.
In late 2004, SVCMC's management became aware that the audited financial
statements on which the Turnaround Plan was based overstated prior years' revenues by $60 million. This masked the magnitude of the revenue shortfall that the system faced. Adjustments for the overstated accounts receivables helped contribute to a $153 million operating loss in 2004.
A severe liquidity crisis experienced by SVCMC during the first half of 2005 led the system to conclude that the Chapter 11 process offered SVCMC the most viable way to restructure its debt and operations. The system expects to emerge from bankruptcy a more efficient, financially sound healthcare system.
A number of issues make the current healthcare environment in New York particularly challenging including the shift in healthcare delivery to ambulatory care, flat or declining reimbursements from private and public payors, and rising medical costs, such as technology and malpractice insurance. Additionally, approximately 25% of New Yorkers lack health insurance.
'The decision to seek bankruptcy protection was very difficult,' said Richard Boyle, chairman of the Board of Saint Vincent Catholic Medical Centers. 'The Board of Directors is confident that the system will emerge from bankruptcy protection a more efficient, financially sound healthcare system that will continue its Catholic healthcare mission in New York City.'
Patients interested in more information regarding the bankruptcy filing, can visit a special section of the system's website at www.svcmc.org or call 800-798-6714.
About Saint Vincent Catholic Medical Centers
Saint Vincent Catholic Medical Centers (SVCMC) is one of the New York metropolitan area's most comprehensive health care systems, serving nearly 600,000 people annually. SVCMC was established in 2000 as a result of the merger of Catholic Medical Centers of Brooklyn and Queens, Saint Vincents Hospital and Medical Center of New York and Sisters of Charity Healthcare in Staten Island. Sponsored by the Roman Catholic Bishop of Brooklyn and Sisters of Charity of New York, SVCMC serves as the academic medical center of New York Medical College in New York City.
The system includes seven hospitals: Mary Immaculate Hospital, Queens; St. John's Queens Hospital; St. Mary's Hospital of Brooklyn; St. Vincent's Hospital Manhattan; St. Vincent's Hospital Staten Island; Bayley Seton Hospital, Staten Island; and St. Vincent's Hospital Westchester. Resources include over 2,500 physicians, four skilled nursing facilities, a system-wide home care service, a hospice and over 60 ambulatory care sites which provide a broad array of medical, psychiatric and substance abuse services. In 2004, SVCMC recorded over 92,000 inpatient discharges, more than 1,100,000 outpatient visits, and 640,000 home care visits. Its emergency rooms, which include three Level 1 trauma centers, received 255,000 visits in that same year, while SVCMC is the largest private provider of EMS services in the New York City Fire Department's 9-1-1 service. Also in 2003, St. Clare's Hospital, now St. Vincent's Midtown, became affiliated with the healthcare system.
