New York hospital system files for bankruptcy

In what is being called New York's largest-ever hospital bankruptcy, Saint Vincent Catholic Medical Centers has filed for Chapter 11 protection, citing mounting debts and falling revenues.

The seven-hospital system, which runs dozens of other health care facilities in the New York area, announced the filing July 5. It said the goal of the bankruptcy was to give the system the time and means it needs to restructure its debt, operations and finances.

While the bankruptcy progresses, Saint Vincent has pledged to keep facilities open and operating. It also assured its nearly 2,500 physicians that it would "continue to invest in its physicians," maintain nursing levels, make capital investments, pay critical vendors and pay employed doctors.

In a written statement, Saint Vincent's president and chief executive, David Speltz, said the system voluntarily chose to file for bankruptcy because of several factors, including operating losses, debt levels, cash flow and accounts payable issues.

Others said the bankruptcy likely was fueled by broader problems in the hospital industry, including an increasing number of uninsured patients and declining reimbursements.

"Demand for services is increasing, facilities are aging, there are new technologies they need to purchase, and there is a lot of competitive pressure on the hospitals," said Richard Gundling, vice president of the Healthcare Financial Management Assn.

Kenneth Raske, president and CEO of the Greater New York Hospital Assn., said hospitals in the state face the same pressures as others nationwide but also have some unique woes. That's partly because unlike others, hospital prices in New York were regulated until 1997. In the wake of deregulation, he said, some of hospitals appear to be having "fits and starts."

Saint Vincent has seen the delivery of health care change, moving out of the hospital bed and into ambulatory settings, said spokesman Michael Fagan. At the same time, he said reimbursements from public and private payers have been flat, if not declining.

Also, like other hospitals, Saint Vincent has felt pinched by the rising number of uninsured patients. Fagan said nearly a quarter of New Yorkers are uninsured. Accordingly, the system provided more than $104 million in charity care in 2004.

The system is about $1.1 billion in debt, Fagan said. It has assets worth about $971 million and brought in about $1.6 billion in revenues in 2004. Still, he said the system had operating losses of $143 million last year.

In August 2004, the system closed St. Joseph's Hospital in Queens. It is in the process of closing St. Mary's Hospital in Brooklyn and Bayley Seton Hospital in Staten Island.

The system was formed in 2000 as a result of a merger of Catholic systems.