Fate of LifeCare remains unclear
BY AMELIA HARPER
Thursday, June 13, 2019
The fate of LifeCare, Rocky Mount’s only long-term acute care hospital, is uncertain at this point as its parent company, LifeCare Health Partners, has filed for bankruptcy and Nash UNC Health Care officials are pondering what role they might play in the facility’s future.
Rebecca Kirkham, a spokeswoman for LifeCare Health Partners, confirmed that the organization has filed a petition to restructure its debt under the protections offered by Chapter 11 of the bankruptcy code.
“Chapter 11 is basically where you say ‘I can’t afford my debt payments anymore. I need to reorganize my debt and get a bankruptcy court involved,’” Shawn Hartley, chief financial officer of Nash UNC Health Care, explained to the hospital board at its meeting last week.
For now, the Rocky Mount LifeCare facility, which is the only LifeCare operation in the state, will operate as normal.
“LifeCare will continue to operate its 12 long-term acute care hospitals, one behavioral health hospital and four home health agencies throughout the reorganization process,” Kirkham said in a statement from the LifeCare organization. “Day-to-day operations at these locations will continue as usual and providing high-quality care remains our highest priority. Employees, patients and family members should notice no changes in operations or quality of care during this time.
LifeCare blames much of its financial woes nationwide on the current state of the health care and Medicaid environment and on debt left over from a previous bankruptcy filing in 2012.
“Despite continued operational and clinical improvements, LifeCare Health Partners faces challenges created by declining reimbursements, payor demands and expanding regulatory requirements. When combined with the large debt we inherited years ago, these factors leave us no choice but to evaluate the best path forward,” the statement from the organization said.
In the meantime, LifeCare is looking for a buyer for all or part of its organization, with the exception of its home health operations, which were not included in the filing.
“Our focus during this time will be on finding a buyer for our hospital operations or another long-term solution that will enable each of our locations to emerge from this process stronger and better positioned to continue caring for patients,” Kirkham said in the statement.
Nash UNC Health Care may be interested in purchasing the local LifeCare Hospitals operations, Hartley said, stressing that discussions of this option still are in the early stages. Nash UNC Health Care already owns the building that houses the Rocky Mount LifeCare facility and has been leasing the property to LifeCare for several years.
“We see three disparate versions of how this could go,” Hartley said. “The first one is that we sit idly by and someone will purchase the long-term acute care center here in town. From what we have been told, the local facility is profitable and would be a good purchase. They could be a good partner for us or they could be a for-profit organization that is not a good partner for us.
“Option two is that we try to purchase the center and bring it back in-house,” he said. “And option three would be to speak to the leadership at UNC and see if they have any interest in purchasing the LTAC and bringing it into their operations.”
At this point, Hartley said, he is favoring Nash UNC Health Care purchasing the operations, including equipment, employee contacts and the “book of business” for the organization, because he feels that it may be in the best interest of the community to protect the only long-term acute care option in the area.
“It is such a huge part of what this community needs and how we serve our patients. And with the continuum of care here, we don’t like the risk of someone we don’t know taking over that operation,” Hartley said.
However, these discussions are preliminary since few financial details have emerged.
“At this point, we don’t know what is going to happen in this process, but we have retained attorneys to represent us in this process,” Hartley said. “We have been told the local LifeCare makes money, but we have not seen the financials yet.”
Hartley said he could not even hazard a guess as to how much the potential purchase would cost.
“Once we get that financial information, we can sit down with our attorneys and use them to help us navigate the best bid price,” Hartley said.
At the board meeting last Thursday, board member Dr. Ivan Peacock cautioned against making a hasty decision to buy LifeCare operations in light of the hospital’s current financial situation.
“This is something we need to be very cautious about since we are already in the process of digging ourselves out of the hole,” Peacock said.
Hartley acknowledged the concern.
“We have to balance that against what our community needs,” he said. “It is very challenging.”
The issue will be under discussion for some time. Hartley said it likely will be August before the complex issues surrounding the bankruptcy of the organization begin to resolve.