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Healthcare Business News

Mediation fails to keep bankrupt N.Y. hospital open

By Barbara Benson, Crain's New York Business
Posted: December 20, 2013 - 4:30 pm ET

Attempts to keep Interfaith Medical Center open have failed, and the Brooklyn hospital will close a little more than a year after it filed for bankruptcy on Dec. 2, 2012. Interfaith will be the eleventh New York City hospital to close since 2007.

Interfaith's unions, creditors, management and New York state officials have spent the past few weeks negotiating the hospital's fate. The judge overseeing the bankruptcy case ordered the mediation to address alternatives to a closure plan filed by the hospital. That closure plan will now go into effect. Its original version called for Interfaith to begin shutting down on Dec. 26.

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The exact closure date is under discussion with state health officials, said an Interfaith spokeswoman, who confirmed the closure. Interfaith's board expressed concern about transferring patients to other hospitals during the Christmas season, when institutions typically must accommodate vacation schedules. The hospital targeted Jan. 7 as an alternate closure date.

The bankruptcy court already approved the transfer of some of Interfaith's outpatient services to Kingsbrook Jewish Medical Center. That hospital agreed to take over several clinics, including an HIV treatment center on Bergen Street, the Bishop O.G. Walker Jr. Health Care Center, a dental clinic and an urgent care center on Atlantic Avenue. The clinics will transfer to Kingsbrook on Jan. 26. Interfaith's urgent care center would move to the current site of its emergency department and would be operated by Kingsbrook. According to court documents filed on Nov. 1, Kingsbrook also is expected to help create a medical village or "other repurposing of IMC's current facilities to serve the healthcare needs of IMC's community."

Interfaith already filed a notice with the state Department of Labor that it plans to lay off 1,545 workers, including 1,405 union workers, on Dec. 26 or within two weeks of that date.

According to the closure plan filed with the court, the shutdown would end all inpatient admissions and elective surgeries. The Emergency Department would go on permanent diversion and operate on a "treat and release or transfer" site that day. The ED would shut completely on Jan. 26, 2014. All patients would be discharged or transferred on that date, and the hospital's outpatient programs would end.

In its most recent financial disclosure, Interfaith reported losing nearly $4 million from operations in October on total revenue of $12.8 million. Losses from operations since the Chapter 11 filing last year totaled $29.9 million. Interfaith has already paid out more than $9 million to lawyers and other professionals in the bankruptcy case.

When Interfaith filed for bankruptcy protection last year, it said its liabilities outstripped its assets by nearly $200 million, with assets of $142.4 million and liabilities of $341 million. The hospital owes millions of dollars to the Dormitory Authority of the State of New York.

What will happen to Interfaith's real estate assets is unclear. There is wide support for the retention of some healthcare services at its building. Interfaith's consultants have shopped around the hospitals' facilities to healthcare-related operators. At one point they had nine letters of interest and reported "substantive" discussions with at least 14 others entities.

Mediation fails to keep Interfaith hospital open" was originally published by Crain's New York Business.

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