DALLAS - Craig General Hospital in Vinita, Okla., could emerge from bankruptcy by July, if the U.S. Bankruptcy Court for the Eastern District of Oklahoma approves its plan, according to attorney Mark Craige.
The hospital in northeastern Oklahoma became the seventh rural hospital in the state to seek bankruptcy protection in five years when it filed Chapter 9
"Rural hospital patients, more often than not, have no commercial insurance and are dependent on Medicare, Medicaid or self pay," the hospital's interim chief executive officer, Herb Crum, wrote in a court filing. "Medicare/Medicaid reimbursement margins have fallen significantly in recent years, and the financial crisis of 2008 left many patients without job associate insurance and without any income enabling them to self-pay for medical services."
The hospital, operated by the Craig County Hospital Authority, remains open with a $600,000 line of credit from Vinita National Bank as attorneys seek to restructure its debt. The major obligation is $3 million owed to the Oklahoma Public Employee Retirement System, officials said.
The hospital has no outstanding bond debt, according to Craige, an attorney with of the firm Crowe & Dunleavy. The last bank qualified bonds of $700,000 were paid off in January through the sale of an apartment complex that the hospital owned, Craige said.
The hospital has unsecured debts of $1.4 million, according to court filings.
Secured debt includes $1.5 million to First National Bank of Vinita, $950,000 to SpiritBank, $1.77 million to Arvest Bank, and $750,000 to several equipment finance companies, according to court documents.
Crum noted in court filings that the pension obligations have become "ruinously expensive."
The hospital has also suffered financially from reduced reimbursement rates, and electronic health record requirements, according to court documents.
The Oklahoma State Department of Health also required a $700,000 remodel of the operating room, surgical services and obstetric services. The resulting four-month closure of those services cost the hospital an estimated $825,000 in revenue, according to the documents.
At the time of the closure, the hospital had 29 days in cash. Administrators responded with layoffs, attrition and property sales, according to court documents.
Oklahoma hospitals in Fairfax, Drumright, Haskell County, Prague, Seiling and Pauls Valley, Okla., also filed for bankruptcy protection in recent years. HMC/CAH Consolidated in Kansas City, Mo, brought the first five out of bankruptcy in 2013. Pauls Valley filed in March 2013.
As of the 2010 census, the population of Vinita was 5,743, a decrease of 11.3% from 6,742 at the 2000 census.
Craig General was opened in 1963 and now has 62 beds and employs about 330 people.
