Memphis area loses provider

An HHBR Staff Report

Mid-South Home Health (Memphis, TN) closed its doors last week after its lender pulled the financing for payroll.

Not only do the company’s 70 Memphis-area employees lose their jobs, but they will most likely lose any pay due to them for days worked since the last week in January. The neighboring Medshares (Memphis, TN) has agreed to offer the employees a one-time signing bonus in case it needs more staff to cover the flood of patients expected as a result of the shutdown at Mid-South.

Mid-South is a subsidiary of Hospital Staffing Services (HSS; Fort Lauderdale, FL), which has operated under Chapter 11 bankruptcy since last March. At that time, the company reported a loss of $5.1 million for the first nine months of the fiscal year. That was caused, the company said, by Medicare withholding payments in order to recoup its loss from overpaying HSS’s New England home care unit in 1993 and 1994. HSS was scheduled to appear at a court hearing on Friday to determine whether it must liquidate or if a Chapter 11 trustee should take over its management.

In December, Mid-South managers told The Commercial Appeal that the company was emerging stronger and with more services, despite the bankruptcy filing. "Anytime the word bankruptcy is used in the same sentence with your company, you’re going to lose some referral sources," Mid-South Regional Director Annette Scott told the Appeal. " … On the positive side, through the bankruptcy, we were able to restructure a company that was financially struggling. We were given a second chance. People are going to be convinced by our persistence that we’re going to be here." The company had developed a reorganization plan that would fully repay creditors over five years.

But on Feb. 12, Union Planters Bank (Miami), formerly Capital Factors, suddenly pulled its financing that allowed HSS to continue daily operations. The money expected that day was going to pay employees for two weeks of work for the period ending Feb. 5. Instead, Mid-South discharged all patients and laid off all employees last week.