Tennessee-based for-profit hospital operator Quorum Health has had a rough go of it financially these past few years, even going so far as to file for bankruptcy on April 7. But according to regulatory filings, Quorum has been granted approval of its plan to climb out of Chapter bankruptcy, and could so as soon as early July.
When the health system filed for bankruptcy, it aimed to reduce its debt by approximately $500 million. Its hospitals, facilities and operations remained open and continued to provide services to patients, and employees were still paid wages and benefits. At that time, it entered into a restructuring agreement with most of its lenders.
The system expects it will realize the $500 million reduction in debt as anticipated, but still needs U.S. Bankruptcy Court for the District of Delaware to issue a final order.
THE LARGER TREND
Quorum’s financial woes began years ago. It was spun off from struggling hospital operator Community Health Systems in 2016, and in the first quarter of 2017 posted a net loss of $22 million.
Quorum’s net operating revenues totaled $527.6 million at that time, a 4% decrease from the year previous. According to Quorum, part of that was a $3.5 million hit resulting from two hospitals the company divested late in 2016. An additional $8.3 million was related to the California Hospital Quality Assurance Fee program, while $3.3 million was due to impairment charges related to hospitals reclassified as held for sale in 2017.
In 2018, Quorum planned more divestitures as it tried to stabilize its financial situation on the heels of an 8% drop in operating revenues and a doubling in their year-over year net losses. Quorum ended the first nine months of 2018 with a net loss of $179.5 million.
ON THE RECORD
“We are pleased to reach this important milestone, which allows our company to begin a new chapter with the flexibility and resources to continue supporting our community hospitals as they serve on the frontlines of this pandemic and beyond,” said Marty Smith, Quorum Health executive vice president and chief operating officer. “We are grateful for the confidence of our financial stakeholders and partners, as well as our dedicated employees and physicians, and look forward to building on the significant progress we have made in strengthening our operations in recent years.”
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