If President Clinton ever requires a little acute care on his vacation, he's now assured it's available on his favorite island hideaway of Martha's Vineyard. Until a week or so ago, that might not have been a sure thing.
Martha's Vineyard Hospital, mired in bankruptcy reorganization since December 1996, engineered a way out by agreeing to pay a group of unsecured creditors nearly $1.4 million of the estimated $6 million they're owed, said Charles Kinney, the hospital's chief executive officer.
In all, about 300 creditors have filed claims worth nearly $8 million against the 123-bed hospital in Oak Bluffs, the only such facility on the scenic island south of Cape Cod.
The settlement followed recent disclosures in an outside audit that the hospital was in the red as far back as 1994 despite assurances from a previous administration that finances were in good shape. Kinney became chief executive five months ago.
In return for the negotiated settlement, which will be paid during the next four years, the creditor group approved a reorganization plan to be submitted to federal bankruptcy court, Kinney said. In addition to the payments, the hospital will hand over two parcels of land it owns on the island.
The money to cover the settlement became available when Massachusetts forgave a $1 million debt to the state's uncompensated-care pool and when adjustments to Medicare claims in previous years produced a net gain of $500,000, Kinney said.
Meanwhile, the hospital reversed three years of red ink by posting an operating profit through the first 10 months of fiscal 1997 ending Sept. 30. As of July 31, operations earned $420,000 compared with a loss of $345,000 during the same period a year ago, Kinney said.
And Harvard Pilgrim Health Care, the New England HMO giant based in Brookline, Mass., was expected late last week to execute an agreement adding Martha's Vineyard Hospital to its panel of participating hospitals-the first managed-care presence on the island.
The hospital's troubles aren't over, though. An investigation by state Attorney General Scott Harshbarger into the use of restricted endowment funds for operations, launched a year ago, is continuing. Recent audited financial statements show that more than $2 million in endowment funds were used for operating expenses.
And an agreement hasn't yet been reached with a local bank that holds the only secured claim-a $1.2 million mortgage.