On December 2, 2012, Interfaith Medical Center, Inc. (“Interfaith”) filed for chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Eastern District of New York, becoming the latest New York hospital to fall victim to the current economic downturn. It remains to be seen whether Interfaith will be able to successfully reorganize in bankruptcy or whether its fate will follow along the lines of Victory Memorial Hospital, Peninsula Hospital Center, St. Vincent’s Catholic Medical Centers and North General Hospital.
Interfaith, which serves the Bedford-Stuyvesant and Crown Heights neighborhoods of Brooklyn, New York, was created in 1983 through the merger of St. John’s Episcopal Medical Center and Brooklyn Jewish Medical Center. Medicaid cutbacks in 2010, a legacy of long term debt, underfunded pensions and medical malpractice liabilities played roles in Interfaith’s financial deterioration. On November 28, 2011, the Brooklyn Health System Redesign Work Group issued a report on the strengths and weaknesses of Brooklyn hospitals. With respect to Interfaith, the report stated that “absent a dramatic change in its operations, Interfaith cannot continue to survive even in the short run.” According to Interfaith’s bankruptcy filings, the Report further increased Interfaith’s financial pressures.
Interfaith filed for bankruptcy protection listing total assets of $142.4 million and liabilities of $341 million. The Dormitory Authority of the State of New York is Interfaith’s largest secured creditor, holding a claim against Interfaith in the approximate amount of $124 million. Interfaith’s largest unsecured creditors include the Centers for Medicare & Medicaid Services, owed $16.1 million, the Dormitory Authority of the State of New York, owed $12.2 million, and the Interfaith Medical Center Nurses Pension, owed $5.4 million.
Interfaith’s chapter 11 filings indicate that Interfaith is exploring the possibility of a potential affiliation or other relationship with one or more other hospitals. Further information on Interfaith’s chapter 11 proceeding, including a copy of all court documents filed to date, can be found by clicking here.