A hospital in another state recently decided that it needed to be aggressive in addressing its subpar financial situation. The community hospital decided to file for Chapter 11 bankruptcy. In the same way, Massachusetts companies that are struggling financially have the right to seek protection under the Bankruptcy Code.
The health care facility is a critical access hospital with 25 beds. According to hospital officials, the number of patient admissions has dropped during the past few years amid the economic downturn that has struck the surrounding region. Admissions have dropped 65 percent during the past four years, and there has been a 10 percent drop in patient volume overall.
Part of the reason for the decrease in patient numbers is the closing of a local mill in 2015, which happened to be the area’s biggest employer at the time. In addition, hospital officials said that the fact that Medicaid was not expanding in the state, coupled with cuts to reimbursement rates for Medicaid, have had a negative impact on the company’s bottom line. The facility, however, does plan to remain open during the bankruptcy process and does not foresee having to lay off any of its 165 employees.
Sometimes companies with ongoing financial problems have no choice but to turn to Chapter 11 bankruptcy to confront the issues head-on. Fortunately, companies often emerge from bankruptcy in much stronger financial positions. An attorney in Massachusetts can help the owners of struggling companies to complete the bankruptcy filing process and thus increase their chances of thriving financially in the years ahead.