Kennewick’s public hospital system plans to seek bankruptcy protection as it continues to deal with its troubled finances.
The Trios Health board on Thursday night approved a resolution authorizing a case to be started under Chapter 9 of U.S. bankruptcy code.
The vote was 6-0, with no discussion. Trios officials have been advised by attorneys not to speak about the bankruptcy until paperwork is filed.
Dr. Leonard Dreisbach, a board member, did say during the meeting, “it’s important that (people) understand that the hospital is going to continue. This is our best way to help it to continue and to function and to improve.”
It’s important that (people) understand that the hospital is going to continue. This is our best way to help it to continue and to function and to improve.
Dr. Leonard Dreisbach, Trios board member
Chapter 9 bankruptcy protects financially distressed municipalities — including hospital taxing districts like Trios— from creditors “while it develops and negotiates a plan for adjusting its debts,” according to U.S. Courts.
Adjusting the debts is usually done by “extending debt maturities, reducing the amount of principal or interest, or refinancing the debt by obtaining a new loan,” the court said.
Liquidating assets to pay off creditors doesn’t happen under Chapter 9.
Trios Health is the name of the Kennewick Public Hospital District’s system of care.
The system has been struggling financially for years. Last year, for example, it saw a net loss of about $17 million.
The Trios board hired a consulting firm to put together an improvement plan, which included everything from restructuring the workforce to considering bankruptcy protection.