Thomas Health System files bankruptcy to restructure long-term debt

By Caroline Salls

Pittsburgh, Jan. 13 – Thomas Health System, Inc. filed Chapter 11 bankruptcy on Friday in the U.S. Bankruptcy Court for the Southern District of West Virginia.

After exploring strategic options on an out-of-court basis, Thomas Health said in a news release that its board of directors voted to seek protection under Chapter 11 to advance its strategic alternatives, including restructuring options to address its long-term debt.

The company said Chapter 11 will allow Thomas Health to not only lessen its debt burden but also strengthen the system’s ability to meet the new health care payment realities and ensure its future.

Thomas Health said it is not closing its doors, and there are no planned changes to employment, services or how care is delivered to patients.

According to the release, this strategic step allows Thomas Health to align its operations with the realities of the current health care industry and meet the ongoing health care needs of the communities it serves.

The company said West Virginia continues to see a significant decrease in commercially insured patients, and Medicaid, Medicare and PEIA continue to reimburse at levels below what it costs hospitals to provide services.

In addition, Thomas Health said opioid/substance use disorder treatment costs are significant and often exceed corresponding reimbursement.

“By addressing our debt structure now, we can secure the long-term future of Thomas Health,” chief executive officer Dan Lauffer said in the release.

“This is not a Thomas Health-only problem. Many hospital systems throughout the country are experiencing financial challenges and are now taking similar actions.”

According to court documents, Thomas Health has $1 million to $10 million in assets and $100 million to $500 million in debt.

The company’s largest unsecured creditor is Siemens Medical Solutions USA, Inc., based in Dallas, with a $1.42 million trade claim.

No other unsecured creditors were listed with claims of $1 million or more.

Throughout the Chapter 11 reorganization process, Whiteford Taylor & Preston, LLP will serve as the company’s legal counsel, SOLIC Capital Advisors, LLC as investment banking and restructuring adviser and Force 10 Partners as financial adviser.

Thomas Health is a South Charleston, W.Va.-based health care provider. Its Chapter 11 case number is 20-20007.

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