New leadership at Trios Health appears to be making a prudent course correction for the financially strapped public hospital district.
At the end of June, it was announced that Trios Health officials had voluntarily filed a petition in federal court under the Chapter 9 bankruptcy code.
That’s not to be confused with Chapter 11 bankruptcy, or Chapter 7 — which is more common and more alarming.
Chapter 9 gives insolvent municipalities protection as their administrators reorganize debt. It is meant to ensure that public entities — cities and school districts, for instance — can continue to operate while their financial troubles are being worked out.
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While large cities like Detroit have filed for Chapter 9 bankruptcy protection, the move has not been a common one in Washington state. Nevertheless, it looks like it could be a good option for Trios Health.
Craig Cudworth of Quorum Health Resources is managing the financial and organizational restructuring at Trios. He met with the Tri-City Herald editorial board recently to discuss how the process is going so far.
From what we can tell, it looks like Trios Health has a solid plan for recovery.
The Kennewick Public Hospital District Board voted last year to bring in the Quorum health consulting firm to complete a financial, operational and strategic assessment and plan.
Cuts were made in employee hours last spring, and Trios is now seeking $150 million in refinancing through the U.S. Department of Housing and Urban Development.
Trios officials also are exploring the possibility of partnering with an outside health system. Cudworth explained that bankruptcy protection actually should help with these endeavors because it makes the health district more financially stable.
In addition, Trios has had some positive news to report since April. For instance, its lab has been reaccredited for two more years, and Trios also achieved high recognition for its stroke program by the American Heart Association and the American Stroke Association.
The Trios hospital also has graduated another class of medical residents, with one choosing to stay on. Three new providers have been hired, one is a hospitalist and two are advanced registered nurse practitioners — one will work in urgent care and one in internal medicine, specializing in geriatrics.
In addition, another nurse practitioner who used to work in family medicine went to school to become a midwife, and now has a practice at the health district’s Women’s & Children’s Hospital campus.
These are signs the hospital is still moving along — looking ahead and planning for the future.
When Cudworth announced the bankruptcy plan, he stressed that the hospital is not closing its doors, and that, instead of signaling an end — the bankruptcy allows for a new beginning.
We certainly hope so.
After years of trying to expand from its Auburn Street location, it was an achievement in 2014 when the hospital district opened its new hospital at the Southridge campus.
But a financial crisis several months later prompted layoffs that concerned the community. In studying the hospital’s balance sheets when he was initially hired, Cudworth had said there was not one, single reason that Trios found itself with cash flow problems.
It was a combination of factors that together created a perfect storm — those factors included the district’s debt load, as well as aggressive competition from Richland’s Kadlec Regional Medical Center, which, among other things, built an emergency center in Kennewick. At the time of its bankruptcy announcement, Trios Health had debt totaling about $221 million and very little cash on hand.
Cudworth said it could be one to three years before the ailing health district emerges out of bankruptcy. In the meantime, it’s reassuring Trios leadership has a plan in place to help it through.