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Calais Regional Hospital Chapter 11 filing

September 17, 2019

On September 17, 2019, Calais Regional Hospital filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the District of Maine.  The hospital will remain open and operating as usual during the bankruptcy process, which is expected to last approximately 12 months.

Filing for Chapter 11 protection during debt reorganization enables the hospital to continue providing high-quality health care in local communities and to keep jobs in the region. Chapter 11 is also a tool to restructure legacy and operational debt. The hospital currently employs over 275 people and is the largest employer in Calais.

Hospital administrators expect minimal impact on operations and staff during Chapter 11. They have requested permission from the presiding court to pay employees in the ordinary course of business. This is a typical request that is granted in Chapter 11. No layoffs are planned.  Restructuring debt will allow the hospital to emerge from Chapter 11 protection on better financial footing.

“The hospital is not closing.  We remain committed to providing exceptional patient care during the Chapter 11 process. All departments are operating as usual and our talented team is focused on delivering high-quality health care services to our community,” said Rod Boula, chief executive officer of Calais Regional Hospital (CRH).

Over the last several years, in spite of the numerous steps CRH has taken to operate more efficiently, a combination of local and national factors have created conditions that have made debt restructuring in Chapter 11 a necessary step. These factors, including downward trending of utilization, high levels of charity care and bad debt, inadequate reimbursements, and increasing regulatory requirements have all contributed to significant losses. 

The hospital has reduced losses from -$2.64 million in 2014 to approximately -$574,600 in 2018. 

“We expect a prompt and efficient reorganization, and to emerge from Chapter 11 restructuring a stronger hospital,” continued Boula. “With continued community support and steady utilization of our services, we can stabilize this hospital and provide high-quality health care to the region now and in the years to come.” 

Patients coming to the hospital will continue to get care and should see no change in how they receive care at the hospital or any of CRH’s outpatient offices. 

“Our dedication to the health of our patients remains our priority.” said Dr. Peter Wilkinson, long-term internist at CRH. “Our team of providers and caregivers will continue to work diligently to ensure that we are providing the best care possible to the people of our region.”

KEY POINTS

  • Calais Regional Hospital is not closing.  During bankruptcy, employees get paid, and hospital services will continue without interruption.  Patient health and safety remain our top priority. 
  • By entering the bankruptcy process and restructuring debt, Calais Regional Hospital will emerge a stronger and more resilient hospital.  The goal is to ensure that the community will continue to have hospital services close to home.
  • During the bankruptcy process, day-to-day operations will stay the same, so if you come to the emergency room, for example, you will receive excellent care and you won’t notice any difference in our ability to help you get well.  If you have a scheduled appointment with your provider, your visit will be unchanged.
  • Bankruptcy is the best option to ensure that Calais Regional Hospital can continue to provide high quality health care and keep jobs in the community. Restructuring strengthens the hospital’s long-term financial position and gives the hospital better options moving forward. 

WHAT CAN THE COMMUNITY DO TO HELP?
You can support the hospital and 281 local jobs by using our services.  Next time you need medical care, come see us. 

FREQUENTLY ASKED QUESTIONS

Is the hospital going to close? 
No. Our goal is to ensure that hospital services continue to be available in northeastern Washington County.  Bankruptcy is a restructuring process that occurs along-side normal day-to-day hospital operations. We aren’t closing our doors. Patients will continue to get care, employees will be paid, and the hospital will run normally.

Will there be layoffs?
No layoffs are planned within the bankruptcy process. We continue to monitor our overall effectiveness at providing excellent care for our patients and will adjust operations as needed.

Why does Calais Regional Hospital (CRH) need to file for bankruptcy?
Over the last several years, in spite of the numerous steps CRH has taken to operate more efficiently, a combination of local and national factors have created conditions that have made bankruptcy a necessary step. These factors, including downward trending of utilization, high levels of charity care and bad debt, inadequate reimbursements, increasing regulatory requirements, and high-cost temporary providers have all contributed to significant losses.  Health care delivery is rapidly evolving and reimbursements are not evolving fast enough to keep up with the expenses associated with rural access to critical hospital services.

Will services be cut?
We do not plan to cut services at this time. In order to continue to provide high quality health care to our patients and keep jobs in the region, we will continue to evaluate all aspects of our operations and service lines will be aligned to regional demand. 

How long will this bankruptcy process last?
Approximately 12 months, however, the Chapter 11 process can be longer or shorter depending on several factors.

Are there other options besides bankruptcy?
Other options were thoroughly explored and none offered a path to long-term stability as effectively or quickly as the Chapter 11 bankruptcy process.  Chapter 11 is a commonly used tool in the life-cycle of a business that gives a fundamentally sound organization the option of restructuring its debt.  In our case, we have worked diligently over the last few years to reduce losses and improve operating efficiency to the point where Chapter 11 is an option. 

Even with bankruptcy, can the hospital afford to stay open?
Yes.  Several factors are helping us improve our balance sheet and “right-size” expenses and revenue. We have a solid business plan in place and with increased community utilization of our services, we fully expect CRH to exit bankruptcy on stronger financial footing. 

What can the community do to help?
We have served this region for over 100 years.  We value our relationship with our patients and we remain dedicated to providing exceptional care, close to home.  You can help us by choosing Calais Regional Hospital for your health care needs.

What happens when CRH exits bankruptcy?
When we emerge from bankruptcy, we will be on much stronger financial footing.  Financial health and long term viability gives us many more options for partnering, collaborating, and finding the best solutions to serve the ever-changing health care needs of the community.  

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