Downey (Calif.) Regional Medical Center has filed for Chapter 11 bankruptcy protection, but officials said all services will stay open and they hope to reorganize within a year. The 181-bed hospital has had no cash reserves since March 2008, and lost about $20 million annually over the past five years.
Calif. hospital seeks Chapter 11 protection
A new management team took over the facility two years ago and in January began converting money-losing HMO and medical group contracts to PPO contracts, a spokesman said. The hospital had about 32,000 capitated members in managed-care plans with five insurers, with a monthly fixed fee from all plans of more than $3.5 million in 2008. The hospital incurred a $25 million one-time charge to exit the capitation contracts. The 87-year-old community not-for-profit hospital has about 71,000 patient visits a year.
“Today's necessary actions will allow us to clean up the remainder of the financial morass that the current management team inherited that was over a decade in the making, and that we have been working to fix for two years,” said Kenneth Strople, president and CEO of Downey Regional Medical Center, in a news release.
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