Vermont's Springfield Hospital Files For Bankruptcy

Jun 27, 2019

Updated 5:15  p.m.

Vermont's Springfield Hospital has filed for Chapter 11 bankruptcy protection.

Listen above to VPR's Henry Epp and reporter Howard Weiss-Tisman discuss the bankruptcy filing.

Springfield Medical Care Systems, which runs the hospital's nine medical and dental clinics, filed its own, separate bankruptcy plan as both organizations try to emerge from years of financial losses.

According to a written statement, the hospital and clinics will remain open and no jobs will be cut, though administrators are also evaluating all aspects of the organization and "services will be aligned to meet the health care needs of the region."

Springfield Hospital has lost about $14 million over the past couple years. Under Chapter 11 of the U.S. Bankruptcy Code, businesses and nonprofits ask a judge to approve a plan that relieves the groups from their debt, and then allows the organizations to continue operating.

"The hospital and health centers are not closing," said Springfield Medical Care Systems Acting CEO Josh Dufresne. "Patient health and safety remain our top priority and we will continue to provide excellent health care to the region during the reorganization process."

At a meeting last month, Springfield Hospital interim CEO Mike Halstead said the organization owed vendors several million dollars. 

Springfield Hospital and Springfield Medical Care Systems owe the IRS $834,895, and more than $2 million to pharmaceutical and healthcare systems organizations across the U.S.

The hospital also owes the Vermont Agency of Human Services $2.04 million in Medicare and Medicaid overpayments.

The organizations have spent the past few months trying to trim costs by closing the hospital's birthing center and laying off about 30 people.

"Patient health and safety remain our top priority and we will continue to provide excellent health care to the region during the reorganization process." — Josh Dufresne, Springfield Medical Care Systems Acting CEO

At the meeting, Halstead said any bankruptcy reorganization would have to include a viable plan for both the hospital and the health clinics to prove that they can survive even after the debt is forgiven.

Halstead said that Springfield has been talking with Dartmouth-Hitchcock Medical Center, but Dartmouth-Hitchcock Medical Center spokesman Rick Adams said a deal has not yet been reached.

"We continue discussions with Springfield Medical Care Systems," Adams wrote in an email. "As we've been doing for some time, we continue to work to help provide the best care for Springfield's patients through on-site services and the work of hospitals in and around the Dartmouth-Hitchcock Health system but no final decisions have been made regarding any formal role D-HH may play in the future of the Springfield Medical Care Systems."

Even if a judge does OK the bankruptcy reorganization, that won't change the overall economic and demographic trends that are causing financial losses at hospitals. This is according to Scott K. Phillips, Managing Director of Healthcare Management Partners, a hospital and healthcare services management firm.

"We're facing continuing workforce shortages, populations that are vulnerable, and then of course chronic poverty," Phillips said.

If approved, bankruptcy reorganization can take up to a year, and Springfield administrators expect minimal impact on the day-to-day operation.

Springfield Medical Care Systems and Springfield Hospital will hold a series of meetings through July in the towns where the health clinics are located including in Ludlow, Bellows Falls, Londonderry, Springfield, and Charlestown, N.H..