By now, many in the community are well aware that Trios Health is facing significant challenges, underscored by our recent filing for Chapter 9 debt restructuring through the court system. But what remains less broadly understood is who ultimately shoulders the burden of our operations, for better or worse. This theme has recently surfaced from a variety of forums in which the community has had the opportunity to provide feedback.
We are paying attention, and we want to help improve our community’s understanding of some of the finer details involved, including forces causing healthcare organizations around the country to struggle. These details matter a great deal.
Nationally, payer reimbursements are low while costs to provide care continue to rise, and demand for healthcare services is increasing even as provider shortages mount. Provisions in the Affordable Care Act, while benefiting many Americans in need of healthcare coverage, have further squeezed healthcare organizations around the country — contributing to an estimated $6 million loss for Trios Health in 2017 alone.
To compound matters, we began struggling with ratcheting lease payments on two new facilities at Southridge that became necessary to our long-term sustainability, but for which public funding measures failed on multiple ballots. Residents of our district didn’t want to pay for a new hospital, but if Trios Health wanted to continue serving them, we had to find another way to get it done. Our volumes and other market indicators were clear on this.
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When our attempt at financing through the Department of Housing and Urban Development fell through, a private lease became our last option. Then, as the lease payments began to ratchet and creditors came knocking, something had to give and we turned to Chapter 9.
To clarify, our decision to file for Chapter 9 was a strategic business decision and not a last-ditch effort to stay open, contrary to natural assumptions. Chapter 9 is a lesser known form of bankruptcy designed to help municipalities reorganize debt in a sustainable way to help protect and ensure current and future operations. We plan to emerge from bankruptcy within one to three years, using this and a variety of complementary strategies to help us get there.
It’s important to note that local taxpayers do not and will not shoulder our financial burdens. Though many assume a sense of “ownership” over Trios Health as a public hospital, the tax revenue we receive — a tiny fraction allocated from annual property tax assessments — would only keep us open three days per year. Many other local entities receive more of your tax dollars, including for needed mosquito control and emergency services.
We are a public hospital district governed by an elected board of commissioners, but we support ourselves with operations like any other business and will continue to do so. The collective voice of our District residents matters a great deal in deciding who will lead the hospital district and help make its highest priority decisions, including those which affect us financially. Generating revenue and maintaining our financial health is Trios Health’s responsibility.
It is because we take this responsibility so seriously that we have taken the steps we have thus far. Included among them has been engaging in discussions about opportunities with other organizations, which we have been doing for several months under strict non-disclosure terms. Upon mutual agreement from all parties, we’ve just announced that such discussions are underway and progressing positively with RCCH HealthCare Partners and UW Medicine.
Together, these two healthcare powerhouses may be able to offer just what we’re looking for on behalf of this community and organization — financial relief, strategic growth and long-term sustainability, and continued access to excellent local healthcare services. They see tremendous potential here, and so do we. Although we don’t yet know the final outcome of these discussions, we are hopeful and will keep the public informed of any concrete developments as we can share them.
The bottom line to all of this is that despite feeling the effects of tremendous pressure from many directions, we’re taking the appropriate steps to ensure a future providing excellent healthcare for this community. And we truly appreciate your support.
Craig Cudworth is CEO of Trios Health.