CareMax announced it has entered into an agreement to sell its management services organization and also announced a sale process for the company's core centers' assets. The sale transactions will be implemented pursuant to a prearranged Chapter 11 plan supported and funded by 100% of CareMax's current secured lenders. CareMax has entered into an agreement with an affiliate of Revere Medical, which will acquire the Medicare Shared Savings Program portion of the company's management services organization that supports care provided to approximately 80,000 Medicare beneficiaries.
CareMax, which operates 56 medical centers in Florida, Texas, Tennessee and New York catering largely to older patients, filed for Chapter 11 bankruptcy in Texas on Sunday. The Miami-based firm listed debts of $693 million and assets of $390 million, according to a filing with U.S. Bankruptcy Court for the Northern District of Texas. In August, CareMax posted a second-quarter loss of $170.6 million and issued a going-concern warning. This month it disclosed it would not be able to file its third-quarter report with the SEC due to a lack of funds.
While 57% of all hospitals in the state lost money on operations, 35 out of 58 hospitals were actually in the black. Behemoth Massachusetts General Hospital had a positive operating margin of 6.6% and its sister academic medical center, Brigham and Women's, posted a 5% margin. Each had a total margin of around 10%. That performance helped fuel their system to grow its net assets by over $1.6 billion for the quarter, bringing its net asset total to $19.1 billion.
Wellpath Holdings Inc., one of the largest providers of healthcare services to prisons and jails across the U.S., has filed bankruptcy after failing to meet its debt obligations while grappling with high labor costs. The H.I.G. Capital-backed firm, which filed for Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas, listed assets and liabilities between $1 billion to $10 billion each. In a separate statement, Wellpath said it has secured a $522 million debtor-in-possession financing facility from some lenders and plans to sell some businesses.
Longtime observers of the Massachusetts hospital industry may be forgiven if they look at the current Steward Health Care debacle and find themselves saying, "I’ve seen this movie before" — in the 1980s. In 1983 Congress passed amendments to Social Security that changed the way hospitals did business. Previously, they were reimbursed on a retrospective basis and were paid what they spent on patient care. As a result, they had little incentive to control expenses, causing healthcare costs to rise faster than the overall rate of inflation.