Since the proposed alliance with Altoona Regional Health System did not work out as planned, Tyrone Hospital officials recently submitted an alternative reorganization plan in which the hospital will have to go at it alone in getting the hospital out of the chapter 11 bankruptcy situation they are currently dealing with.
This plan will include using Tyrone Hospital’s cash flow to make this happen. According to the plan, the hospital will be making substantial payments to their creditors that will last until the year 2013.
In this plan, there are 13 different classes of creditors and a total of 250 creditors – one of which is the trustee of the malpractice judgment against Tyrone Hospital and Dr. Roy Pazmino. This lawsuit is dealing with the parents’ claims that negligence on the part of the doctor led to their child’s cerebral palsy. By law, if the doctor’s malpractice insurance cannot pay the entire sum of money requested in the malpractice case, the hospital involved will have to make up the difference. The claim against the hospital is $2.5 million.
However, not included as part of the plan is the unresolved lawsuit former CEO Thomas Bartlet filed against the hospital. Bartlet is seeking close to $7 million.
Payment plans to the various creditors include some with interest and some without interest.
According to the plan, Tyrone Hospital will start with close to $1 million in cash. They will also raise prices by 2 percentage points each year.
The hospital will attempt to increase patient volume. In order to do this, they will have to attempt to have the number of inpatients increase from the current figures of 1,132 per year to at least 1,571 a year when the six year period ends.
Also filed with the reorganization plan is a disclosure statement explaining how the hospital ended up in this situation. This explains that the Tyrone Hospital had a surplus of $1,682,335 in 2000.
Beginning in 2001, the hospital saw a loss each year. Each year, Tyrone Hospital saw a deficit exceeding $1 million, except for the 2007 fiscal year, which ended June 30, 2007. The highest being a deficit of $3.9 million in 2006 and the lowest being $587,000 at the end of the 2007 fiscal year.
The disclosure statement blames the former Chief Executive Officer (CEO) and Chief Financial Officer (CFO) that were succeeded by current CEO Walter Van Dyke and CFO George Berger, a total of 74 doctors leaving during the six years of financial losses, and the employee pension fund, which the hospital had to contribute over $800,000 to in 2006.
In order for the plan Tyrone Hospital submitted to go into effect, it must be approved by Judge Bernard Markovitz in U.S. Bankruptcy court and its creditors.
