Springfield Hospital has plan to exit bankruptcy

Valley News Staff Writer
Published: 8/20/2020 9:17:22 PM
Modified: 8/20/2020 9:17:10 PM

MONTPELIER — Springfield Hospital officials on Thursday told Vermont state regulators they aim to file a plan to exit Chapter 11 bankruptcy within 60 days, and to execute that plan by the end of the calendar year.

The plan, which will require the approval of the bankruptcy judge, would separate financially the 25-bed hospital in southern Windsor County and Springfield Medical Care Systems, the federally qualified health center which also includes community health centers in Charlestown and the Vermont communities of Chester, Ludlow, Bellows Falls, Londonderry and Springfield.

“We believe (we) can be sustainable going into the future,” interim Springfield Hospital CEO Mike Halstead said during a virtual budget hearing held by the Green Mountain Care Board on Thursday.

The board, which also heard from leaders of Mt. Ascutney Hospital and Health Center in Windsor on Thursday, is in the process of reviewing budgets for the hospitals’ upcoming fiscal year which begins on Oct. 1. They are doing so as the COVID-19 pandemic persists and as the state’s efforts to reform health care, spearheaded by GMCB, have come under scrutiny.

Achieving a sustainable future relies on continuing to keep hospital expenses to a minimum, an effort Halstead said he and others at Springfield Hospital have worked to do since the hospital’s large debt came into the spotlight in late 2018 and since it entered bankruptcy in June of 2019. It also relies on patients returning to the hospital for treatment at pre-COVID-19 rates by Oct. 1 and on a successful exit from bankruptcy with sufficient cash on hand to continue operations, he said. As of June 30, Springfield had 56 days of cash on hand.

Springfield is expecting to finish this fiscal year on Sept. 30 with an operating loss of $3.6 million, according to Halstead’s presentation.

That’s significantly worse than the $985,000 loss on operations the hospital had budgeted for the year, but a marked improvement from the prior years.

The hospital saw losses on operations of $8.2 million in fiscal year 2019 and $7 million in 2018.

For 2021, Springfield is budgeting a turnaround for a slight gain on operations of $185,000 with a total budget of $53.1 million.

Halstead had told regulators last year that Springfield’s hopes for the future hinged on finding a partner, but regional talks with Mt. Ascutney, Valley Regional Hospital in Claremont and Mt. Ascutney’s parent organization Dartmouth-Hitchcock Health have waned.

During Mt. Ascutney’s budget hearing on Thursday, CEO Joseph Perras said that while Mt. Ascutney is still talking and working closely with Valley Regional, it’s as yet unclear whether Springfield Hospital will be a “partner or a competitor in our region.”

Board member Jessica Holmes asked Perras to share his thoughts on how Mt. Ascutney’s affiliation with D-HH has affected its operations. Perras said that when Mt. Ascutney joined D-HH in 2014 it was in a tight spot financially and “needed security” that a larger organization could bring. Mt. Ascutney also had resources, including one of the only acute rehabilitation programs in the state, that helped to make it a good match for D-HH, he said.

“That match isn’t always there,” he said.

Mt. Ascutney officials presented a $59.7 million operating budget for fiscal year 2021, which is up from the projected total for 2020 of $56.3 million and from the budget regulators approved for 2020 of $57.1 million.

The proposed 2021 budget includes adding the new services of urology and neurology, and expanding the hospital’s ophthalmology and psychiatry services.

Mt. Ascutney is projecting a positive operating margin for the current year of $915,000, and a positive margin for the coming year of $352,000.

Both Mt. Ascutney and Springfield officials acknowledged the challenges they faced in putting together a budget in light of the uncertainty surrounding the ongoing pandemic. Mt. Ascutney has received $5.26 million in COVID-19 relief through the federal CARES Act and other sources, and Springfield has gotten $5.79 million to help offset losses they experienced due to the pandemic.

Despite that relief, they still face uncertainty around whether there will be another surge of COVID-19 cases in the region and how that might affect their finances.

Mt. Ascutney officials have not yet committed to continuing their participation in contracts offered through the accountable care organization OneCare Vermont, which was founded jointly by D-HH and the University of Vermont Health Network. Mt. Ascutney has not had a good experience with those contracts with insurance companies that pay health care providers a fixed amount per patient, rather than on the traditional fee-for-service basis, said Perras, who also sits on OneCare’s board.

Green Mountain Care Board chairman Kevin Mullin pressed Perras on this issue.

“Another troubling aspect is that one of the founders of this organization is your affiliated entity, yet you seem to be walking away from it,” Mullin said. “It’s perplexing.”

Perras said he is juggling several interests; one is that as a physician he would like to see improvements in the way health care is delivered, another is that as a member of the board of OneCare he sees it as a possible vehicle for change and a third is that as CEO of Mt. Ascutney he is responsible to 400 employees and the surrounding community to keep the organization afloat.

He indicated that both Mt. Ascutney’s board and the D-HH board will meet next month to consider which OneCare contracts Mt. Ascutney will participate in next year. It has committed to one with Medicaid, but not to others with Medicare or commercial insurers.

“Outside the uncertainty of COVID, there’s still a lot of balls in the air,” Perras said.

Nora Doyle-Burr can be reached at ndoyleburr@vnews.com or 603-727-3213.

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