Interfaith Medical Center Enters Chapter 11 To Facilitate Restructuring
In a move that was not unexpected given its severe financial situation, Interfaith Medical Center has followed the path well-worn by other hospitals in New York and filed for bankruptcy, threatening to leave Bedford-Stuyvesant without a full-service medical facility. The hope is that this action will give them time to restructure their financial obligations and emerge as a stronger institution.
In the press announcement of the Chapter 11 filing, Mr. Luis A. Hernandez, President and Chief Executive Officer of Interfaith Medical Center said, “Unfortunately, our hospital was a victim of New York State’s drastic Medicaid reductions in 2010. Because the people we serve are predominantly poor and fully 65% are dependent on Medicaid or Medicaid-managed care, we have had a unique deleterious financial challenge of being dependent on the state’s Medicaid reimbursements.”
“Prior to those rate reductions, Interfaith Medical Center operated with positive operating margins. However, the implementation of the New York State APR-DRG reimbursement methodology resulted in approximately 40% reduction in IMC’s base reimbursement rate. The result was a dramatic and immediate reduction in revenue requiring re-engineering of the organization and expense structure. Despite our hard work to reduce costs, it became impossible to continue to operate under those rate reductions without an operating loss. This filing will allow us to restructure our balance sheet, renegotiate some existing agreements and reposition the hospital for long-term viability, strength, success and growth,” Mr. Hernandez concluded.