SOUTH CHARLESTON, W.Va. — Thomas Health System, which runs Thomas Memorial Hospital in South Charleston and St. Francis Hospital in Charleston, announced Friday evening it would soon file for Chapter 11 bankruptcy to seek protection from its long-term debt.
“Thomas Health is not closing its doors and there are no planned changes to employment, services, or how we deliver care to our patients,. The Chapter 11 process will not affect enrollment of patients or employers in healthcare plans in 2020,” a news release said.
Thomas, which has approximately 1,700 workers, said the filing would allow it “to realign its operations with the realities of the current healthcare industry and meet the ongoing health care needs of the communities it serves.”
“By addressing our debt structure now, we can secure the long-term future of Thomas Health. This is not a Thomas Health-only problem. Many hospital systems throughout the country are experiencing financial challenges and are now taking similar actions. We appreciate our community’s support as we continue serving the best interests of our patients, employees, physicians and all those whose livelihoods will be positively impacted by Thomas Health’s mission to each of communities that we proudly serve,” Thomas Health CEO Dan Lauffer said.
The financial challenges laid out by the hospital Friday include a decrease in commercially-insured patients; an increase in government insured patients including those covered by Medicaid and PEIA that provide low level reimbursements for services. The hospital also said it’s been hurt by patients not being able to afford their deductibles and the costs of the opioid epidemic.
South Charleston Mayor Frank Mullens tells MetroNews the hospital has also been hurt by long-term debt that includes property purchases, building projects and the purchase of St. Francis Hospital more than a dozen years ago.
“That all kind of intertwined to amount to some of the debt they are dealing with,” Mullens said.
He called the Chapter 11 bankruptcy filing “a good move on their part to deal with the challenges they face.”
Mullens said he’s been assured the employees will keep their jobs and the programs offered will continue.
“They have our full support. I think they have a good game plan to tackle this issue and we’ll see what happens,” Mullens said.
Kanawha County Commission President Kent Carper said the hospital system also has the full support of the commission.
“These things happen, reorganizations happen, but I’ve been assured the families and the jobs are safe,” Carper said.
Carper said he’s afraid what’s happened to Thomas Health will happen to other hospitals if something isn’t done to change the current health care structure.
“I’m not optimistic that there’s been such little concern from the state and the federal government about local hospitals and this is why we are having this trouble all over the country. I am confident about the management of the hospital. I believe they will survive,” Carper said.
State lawmakers are reviewing a plan from Gov. Jim Justice on how to spend a $309 million surplus in Medicaid funding. State Senator and Democratic gubernatorial candidate Ron Stollings, D-Boone, suggested earlier this week reimbursement rates should be increased for health care providers.
“Has there been any consideration of changing any of these reimbursement rates to pay a little bit more so that our hospitals can keep their doors swinging?” Stollings asked those with the governor’s office Thursday.
“If you turn that $309 million into a billion dollars and actually paid the cost of delivering the service, maybe these hospitals could stay open.”
Thomas Health said Friday that it’s been very open over the last few years about its financial challenges and has made a number of changes saving millions of dollars.
“For example, Thomas Health has merged duplicative services between Thomas Memorial and Saint Francis Hospital; consolidated both IT systems to an integrated platform; and built more affordable care clinics for non-emergent patients,” Friday’s news release said.
Mayor Mullens said he’s aware about the concerns the filing will create but said he’s confident the reorganization will allow the operation to emerge stronger.
“Any time you mention the word bankruptcy it raises a question. Obviously, it raises a red flag and concerns and even fears to some point to some people that are dependent on the hospital and employed there,” Mullens said. “Thomas is an asset to our community and we want them to succeed and hopefully this will get them on the path of some financial strongholds in the future.”
Thomas Health said it explored a number of strategic options on an out-of-court basis but ultimately its board of directors voted to file for Chapter 11.
Thomas Memorial Hospital opened in South Charleston in 1946. It purchased Charleston-based St. Francis Hospital in 2007. The two formed Thomas Health System.