Four Mississippi hospitals have declared Chapter 11 in the past week, and five rural hospitals in the Magnolia State have closed since 2013.
Curae Health and three affiliated hospitals in Mississippi have filed for bankruptcy protection after claiming more than $96 million in liabilities, the Clinton, Tennessee-based hospital chain announced this week.
The affiliated Mississippi hospitals are: Gilmore Memorial Hospital, in Amory; Panola Medical Center, in Batesville; and Northwest Mississippi Medical Center in Clarksdale, which Curae leases.
Four Mississippi hospitals filed for Chapter 11 in the past week, including unaffiliated Magee General Hospital, which filed last Friday.
Curae said in a media release that the goal of the bankruptcy filing was "to ensure that the communities where these hospitals are located will continue to have access to local healthcare services."
The not-for-profit health system blamed insolvency on "several factors."
"Many rural hospitals across the country have faced year-over-year financial challenges due to government funding cuts, unfunded care mandates and other pressures," Curae said.
"Our hospitals were not immune to these issues and after exhausting other possibilities, the decision was clear that the hospitals could not continue to operate under mounting debt and tightening financial resources," the statement read.
Those pressures included unexpected expenses related to electronic medical records and a cash crunch that came as vendors demanded payment for outstanding debts.
Curae said the bankruptcy became the only viable course because cost-savings measures were outstripped by "a dramatic decline" in net revenues that came immediately after the hospitals were acquired from Community Health Systems in 2016.
Local media reported that bankruptcy filings made in Nashville showed that Curae Health and the three hospitals have $3.4 million in cash and cash equivalents and $96 million in liabilities. It owes lender ServisFirst $18.8 million. It owes Community Health Systems, which previously owned the three hospitals, $28.6 million.
"The conversion to a not-for-profit system combined with a lower cost structure was unable to keep pace with the dramatic decline in revenue," Curae said.
Ownership of Curae's Lakeland Community Hospital in Haleyville, Alabama, was transferred to a local authority this spring and it's now managed by Java Medical Group. Curae's fourth hospital, Russellville Hospital in northwest Alabama, has not filed for bankruptcy.
Curae says its 1,245 employees will be paid through the bankruptcy proceedings.
The health system's Mississippi hospitals "will be sold as going concerns to arms-length third parties who are able to keep them in operation so that they can continue to serve the community."
"All potential acquirers of the hospitals will have the opportunity to express their interest in acquiring one or all of the hospitals and to bid for them in a fair and open process," Curae said.
"We have been working with various interested parties to assist them in their review of the hospital(s) and anticipate filing a motion with the bankruptcy court to authorize the sale of the hospitals in the near term. Once the legal process is completed we hope the hospitals will emerge in a stronger financial and market position," Curae said.
The North Carolina Rural Health Research Program says 87 rural hospitals have closed nationwide since 2010, including five rural Mississippi hospitals since 2013.
John Commins is a content specialist and online news editor for HealthLeaders, a Simplify Compliance brand.
Curae vows to keep hospitals open while new owner is found.
The health system has accumulated $96 million in liabilities.
Unanticipated EHR costs cited as a one of 'several factors.'