The Walker County Hospital District and Community Hospital Corp. have formed a new entity that will own and operate the bankrupt Huntsville (Texas) Memorial Hospital, the organizations announced Friday.
Huntsville Memorial is a 123-bed not‐for‐profit community hospital that holds a Joint Commission Primary Stroke Center designation. It filed for Chapter 11 bankruptcy protection in November after a series of failed investments and an inability to secure competitive pricing for supplies and managed-care contracts, executives said in bankruptcy filings.
"Aligning with CHC is the best option for HMH," Anne Woodard, Walker County Hospital District board chair, said in prepared remarks. "This move puts us on a path of renewal that allows us to advance on many levels—from operational and financial performance to quality of patient care. We are wholeheartedly committed to serving the healthcare needs of Walker County and neighboring communities."
Beginning in 2008, Huntsville Memorial acquired an ambulatory surgery center and imaging center, opened several rural health clinics and a standalone emergency department in Walker and surrounding counties, and pursued a lab venture. All business expansions shuttered in 2018 and early 2019, except the imaging center and one rural health clinic, according to bankruptcy filings.
Texas shifted its insurer for state employees from United Healthcare to Blue Cross and Blue Shield, which yielded lower reimbursement rates, the organization said.
That contributed to a $16.4 million operating loss on operating revenue of $86.9 million in 2018, according to Modern Healthcare Metrics. Huntsville Memorial had more than $41 million in total assets in 2018 and nearly $35 million in total liabilities, Medicare cost reports show.
Independent hospitals' finances continue to decline. Independent government-owned hospitals had an average annual operating margin of negative 16.6% and a $15.8 million operating loss in 2016 compared with a negative 7.9% operating margin and $8.4 million operating loss for their system-owned peers, a 2016 white paper shows.
Partnering with the CHC will give Huntsville access to a sizable group purchasing organization contract, among other benefits, said Jim Kendrick, CHC president and CEO.
"I can guarantee 10% savings off of their current supply spend," he said. "We will hit the ground running with an in-depth operational assessment, making sure their expenses are aligned with revenue production, making sure they are maximizing their federal matching dollars and all of the supplemental payments are realized as we look to keep more medical services in the community."
The Walker County Hospital District paid some debts on behalf of the new entity—Huntsville Community Hospital, Inc. Huntsville Memorial Hospital will retain its name.
Hunstville Memorial represents hundreds of rural hospitals that have struggled to survive. More than 120 rural hospitals have closed in the past decade and more than 450 are vulnerable, recent data show.
Without intervention, the Huntsville community would've likely lost a key asset in its sole hospital, Kendrick said.
"It's devastating to a community when a hospital goes away," he said.
