SOUTH CHARLESTON, W.Va. — Thomas Health System hopes to emerge from Chapter 11 bankruptcy by Sept. 1 after coming to an agreement with a new financial partner.
Thomas, which operates Thomas Memorial Hospital in South Charleston, Charleston-based St. Francis Hospital, Thomas Health Physician Partners and TMH Services, announced Friday an agreement in principle with a group of investors headed up by New York-based Hamlin Capital Management that will provide a discounted refund of $145 million in bond debt Thomas had built up.
A bankruptcy judge has yet to rule on the agreement that was filed in U.S. Bankruptcy Court Thursday.
Thomas Health filed for bankruptcy protection on Jan. 10. Thomas Health President and CEO Dan Lauffer said it’s amazing they’ve been able to come up with a plan to deal with the long-term debt in just more than five months.
“To be in the position to file a viable plan that will restructure and strengthen our balance sheet, while maintaining and continuing to treat our patients, especially during times as unprecedented as the last 90 days, is a testament to the hard work of our employees,” Lauffer said in a Friday news release.
Thomas lost $13 million in April because of the pandemic. It received $4 million in funding from the federal CARES Act.
Laufer told MetroNews in early May that trying to emerge from bankruptcy during a pandemic was something they never considered when they filed for protection in January.
“No one involved in this had expected that,” Lauffer said at the time. “That certainly put a different twist on our reorganization.”
Thomas, like other hospitals, prepared for a possible surge of COVID-19 patients by putting off elective procedures. The system laid off approximately 500 workers on April 3, many have been called back to work in recent weeks with the resumption of a full range of hospital services.
“It’s business as usual at Thomas Health, and our team is here, fully prepared to meet patient care needs,” Lauffer declared Friday. “This milestone is just the beginning of what we plan to achieve moving forward today and tomorrow. We have ambitious plans for Thomas Health to support not only our patients and community, but also our highly-skilled physicians and committed employees.”
Thomas’ reorganization plan was reached through a series of negotiations. The highlight is what officials call a “significant reduction” of the company’s long-term debt. The company listed its debts between $100 million and $500 million and its assets between $1 million and $10 million in a Jan. 15 bankruptcy hearing. Its largest creditor are bond holders connected with construction projects at Thomas Memorial Hospital during the past decade. Bankruptcy has allowed Thomas to stop payment to creditors while the reorganization is taking place.
The hospital has also been hurt by an increasing number government-insured patients compared to patients that carry commercial insurance. Thomas said in January high deductibles were also impacting their patients. The hospital has negotiated payment plans in many cases.
Thomas Health System has approximately 1,650 workers and treats approximately 275,000 patients a year. St. Francis Hospital in downtown Charleston remains prepped to serve as a surge hospital if COVID-19 cases increase.