Thomas Health files Chapter 11 to advance restructuring options

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South Charleston, W.Va. (WOWK) — Thomas Health’s Board of Directors says that after exploring strategic options on an out-of-court basis, it has voted to seek protection under Chapter 11 to advance its strategic alternatives, including restructuring options to address its long-term debt.

The health system says Chapter 11 will provide Thomas Health with the opportunity to not only lessen its debt burden but also strengthen the system’s ability to meet the new health care payment realities and ensure its future. 

Thomas Health says it is not closing its doors and there are no planned changes to employment, services, or how they deliver care to patients. The Chapter 11 process will not affect enrollment of patients or employers in healthcare plans in 2020.  This strategic step allows Thomas Health to align its operations with the realities of the current healthcare industry and meet the ongoing health care needs of the communities it serves. 

The Kanawha County Commission was notified of the filing this morning. Commissioner Ben Salango said, “I have personally been in contact with the officials of Thomas Health System since this morning. My first concern is for the 1,700 families that depend on employment at Thomas Health Systems. I have been assured that this restructuring will not result in layoffs. Thomas Health Systems is one of the largest employers in the Kanawha valley and a leading provider of health care in our county, and I am confident that it will come through this restructuring stronger than before.”

Thomas Health officials have publicly discussed these challenges for several years and say they have made significant changes within its organization that have saved the health system millions of dollars, such as merging 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.

CEO of Thomas Health, Dan Lauffer said, “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 said in a statement that its financial challenges are largely beyond its control:

  1. West Virginia continues to see a significant decrease in commercially-insured patients.
  2. Medicaid, Medicare and PEIA continue to reimburse at levels below what it costs hospitals to provide such services.
  3. Many patients are not able to afford their deductibles; although Thomas Health works with patients to pay for their deductibles through payment plans.
  4. Opioid/Substance Use Disorder treatment costs are significant and often exceed the corresponding reimbursement.

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