Astria Health still has its work cut out for it in bankruptcy | Health care
During the bankruptcy process, Astria Health paid off around $ 100 million in debt, including loans from its secured creditors, said Sam Maizel, the Los Angeles-based lawyer who represented Astria Health.
Maizel said Astria Health’s bankruptcy process had met its goals, including implementing a reorganization plan and paying off sizable debt.
“We ended up with a great result,” he said. “I am really proud of the way this business has gone.”
Astria Health’s bankruptcy case will remain active as it deals with claims from unsecured creditors and works to resolve a dispute with Cerner Corp., its former revenue cycle provider.
Pay off the debt
When Astria Health filed for bankruptcy in May 2019, it owed Lapis Advisers around $ 45 million. Most of that – over $ 35 million – was in bonds for Astria Health’s purchase of the Yakima Regional Medical and Heart Center and Toppenish Community Hospital. Lapis loaned an additional $ 10 million in early 2019, when the organization experienced cash flow issues.
Astria Health says it comes out of bankruptcy more financially sound
Astria Health was able to repay two secured lenders, MidCap Financial Trust and Banner Bank, when it secured $ 36 million in debtor-in-charge financing from JMB Capital Partners Lending. Astria Health used much of that funding to repay the more than $ 20 million it owed to the two lenders.
Lapis Advisers became its debtor-in-operator lender at the end of 2019. The US bankruptcy court approved Astria Health’s request to borrow up to $ 43.1 million, enough to pay off JMB Capital Partners Lending, as well. that to provide $ 700,000 to cover operating costs. expenses early 2020.
Astria Health is a local – but smaller – post-bankruptcy organization
The remainder of Lapis Advisers’ debt was repaid on Jan.15, when Astria Health finalized a $ 75 million loan from Tacoma-based MultiCare Health System. Astria Health used this loan and $ 5 million of its funds to repay what it owed to Lapis Advisers. Documents filed with the US bankruptcy court showed that MultiCare’s loan had a more favorable interest rate – 9.5% – compared to the loans from Lapis Advisers, which ranged from 10% to 13.5%. .
From now on, Astria Health will follow the process of prioritizing and reimbursing unsecured creditors. As part of the reorganization plan, the organization has a trust to fund payments to unsecured creditors. The trust currently has $ 5 million, but additional funds could come from monetary compensation in “various litigation,” Maizel said.
A critical issue in the bankruptcy case is a dispute with Cerner Corp., which provided revenue cycle services. Astria Health has raised issues with Cerner, including the inability to collect millions of dollars in revenue during the latter part of 2018 through early 2019, for the cash flow issues that led to his filing for bankruptcy. in May 2019.
Cerner and Astria have resolved some issues. Cerner will continue to provide electronic health record services, but Astria Health has formally terminated an agreement for revenue cycle services.
A separate legal case to resolve Astria and Cerner’s claims is expected to go to Judge Whitman L. Holt of the U.S. bankruptcy court, said Jim Day, Astria Health attorney for the Cerner Corp. case. Astria Health has until March 22 to file adversarial proceedings with the U.S. bankruptcy court.
“All claims between the parties (will) be included in this adversarial process,” Day said.
Although Day did not specify which claims would be addressed in the proceeding, Astria Health had previously claimed that issues with the revenue cycle under Cerner Corp. resulted in the organization’s inability to collect revenue, causing more than $ 150 million in damages.
Meanwhile, Cerner claimed Astria Health owed him millions of dollars for services before and after the organization filed for bankruptcy in May 2019.
Paid leave for employees
One issue among Astria Health employees, particularly those affected by the Astria Regional shutdown, was the fate of paid time off that was at issue during the bankruptcy process.
Maizel said current employees, including former Astria Regional employees who moved to other facilities, should have kept the gained PTO.
“The PTO stayed on the books,” Maizel said. “Whatever PTO they had, they just kept it.”
For former employees, some may have gotten some of their PTO through two agreements with employee unions, the Washington State Nurses Association and SEIU Healthcare 1199NW. Others may be able to obtain a PTO payment through the unsecured creditors claim process.
“It would be handled on a case-by-case basis,” Maizel said.