Fayette Regional Health System is assuring the public that it intends to stay open and provide quality health care during reorganization.
Within the past two weeks, pay cuts for all hospital employees have been put in place; the interim leader of the North Star Recovery program has resigned; and the hospital has received approval to borrow an additional $1.6 million to stay open until after it is sold in a bankruptcy proceeding.
The hospital is in Chapter 11 reorganization under federal bankruptcy law. A court order has approved selling the hospital by auction to qualified bidders, with bids due April 30. It’s expected the sale will be complete by mid-May.
On Friday, the U.S Bankruptcy Court in Indianapolis approved an interim order approving the hospital’s request to borrow up to $1.6 million more from Comerica Bank, which is headquartered in Dallas, Texas. The loan is called postpetition financing, meaning that the money would be repaid after the hospital comes out of Chapter 11. In January, the bankruptcy court allowed the hospital to borrow up to $2.5 million from Comerica Bank to meet ongoing expenses, including payroll.
The hospital went back to court on March 22, stating that $2.5 million would not be enough money to meet expenses before the auction sale. An emergency hearing on that request was March 26. The court approved the hospital’s plan on an interim basis and set a final hearing on it for April 12.
The court order requires FRHS to keep an accounts receivable balance of at least $5 million due within 90 days or less; to deposit funds received into an account with Comerica; and to provide Comerica with ongoing financial data.
In regards to the April 30 sale, if no acceptable bids are received, the loan would be in default and Comerica would not be obligated to make further loans to FRHS. The document sets forth general outlines of how the hospital could be closed if the sale is not successful.
Fayette County officials are discussing possible involvement in the sale. The Fayette County Board of Commissioners hired an Indianapolis attorney specializing in health care to help them make connections with companies that might be interested in bidding on the hospital. Commissioners said that there might be money available from the Rural Development program of the U.S. Department of Agriculture to assist with the purchase, but obtaining those might require involvement from a government body.
Michael Dora, USDA Rural Development director for Indiana, confirmed last week that there could be funds available in some kind of public-private partnership but said he is not at liberty to say anything else at this time. Dora grew up in Connersville and lives in eastern Rush County. He affirmed that he is deeply interested in keeping Fayette Regional open, saying it’s essential to have medical services available in this community.
The Fayette County Council, which controls the county’s budget and spending, apparently will be discussing options related to FRHS during an executive session scheduled Tuesday in the courthouse.
On March 14, the hospital had announced 10 percent pay cuts, saying that action had been taken at the direction of Hammond Hanlon Camp LLC (H2C), a consulting firm that is advising FRHS during the Chapter 11 proceedings.
In an email to the Connersville News-Examiner, the hospital stated, “Based upon directives from H2C, additional actions were announced on Thursday, March 14. These actions were necessary to help sustain FRHS through the next several weeks of the bankruptcy process. All Fayette Regional physicians, nurse practitioners, administration and salary employees received a 10 percent reduction in wages. Fayette Regional hourly employees received a 10 percent reduction in hours and corresponding wages. This change was effective for the bi-weekly pay period beginning March 17, 2019, until further notice.”
The hospital also stated that the interim director of North Star Recovery has resigned and will not be replaced immediately. The original director of North Star, Katrina Norris, resigned earlier, and Jessica Crouch had been the interim leader.
The hospital email stated, “Jessica Couch, North Star team leader, recently resigned to pursue another professional opportunity. Because of the proximity of this resignation to the deadline for qualified bids, it was determined to hold the position vacant. Amanda Gilley, Chief Nursing Officer, has assumed this role in the interim, and continues to work with North Star medical director, Dr. Vahid Osman.”
The hospital’s email concluded by stating, “Although the last several months have been challenging, it’s important that the community knows that Fayette Regional is still OPEN and doing wonderful things. We are still providing affordable, quality health care to the Whitewater Valley, and we still expect to emerge from this stronger under new ownership. We anxiously await the April 30 deadline for qualified bids, the May 2 oral auction and the May 13 court approval.”