Two HH companies announce bankruptcy protection filing
Two HH companies announce bankruptcy protection filing
By MEREDITH BONNER
HHBR Editor
Two major players in the home health sector had to file for Chapter 11 protection last week, showing more effects of the major financial cuts the Balanced Budget Act of 1997 brought with its passage.
Medshares (Memphis, TN) and its Soleus Healthcare Services affiliated home healthcare companies filed for U.S. Bankruptcy Court protection last week after running out of cash and being cut off by their lender, reported the Commercial Appeal of Memphis.
And in another part of the country, HealthCor Holdings (Dallas) filed for Chapter 11 bankruptcy protection in a U.S. Bankruptcy Court in Dallas, also saying it has run into cash problems due to the Medicare reimbursement cuts.
HealthCor, which was delisted from Nasdaq last year because it couldn’t keep the required minimum share price and now trades over the counter, did not disclose further information about the filing, according to a Wall Street Journal report. But HealthCor has been divesting certain nursing and medical equipment operations in the last few months. In June, HealthCor sold its Texas community care service offices to Auxi Health (Nashville, TN) and all of its HME operations to Lincare Holdings (Dallas). In addition, last week, HealthCor sold its second unit to ComTech Consolidation Group’s (Houston) Unique Drawing subsidiary. Unique Drawing acquired HealthCor’s Medicare and commercial home healthcare operations in League City, TX. The purchase was made in exchange for cash. The League City operations had revenues of $1.9 million in FY98. Unique Drawing acquired its first HealthCor unit in early July, buying HealthCor’s home health nursing operation in Beaumont, TX.
Medshares was forced to restructure its operations recently just 10 months after buying 70 home health agencies from Columbia/HCA Healthcare (Nashville, TN) and six months after acquiring the home nursing division of Integrated Health Services (Owings Mills, MD), which is now called Soleus Healthcare Services.
The cash crunch came after the acquisitions were complete, but at a time when federal and state regulatory authorities have been delaying reimbursements for services for 210 days, said Robert Leech, senior vice president for government relations with the management firm TBN of TN (Memphis, TN), which manages Medshares. Supplementing company reserves with borrowed funds, the company recently hit its banker’s lending limit, he told the Commercial Appeal.
The reorganization included 160 home health affiliated agencies, with 103 petitions filed under Chapter 11 of the U.S. Bankruptcy Code. Those companies include affiliates of Soleus; Tibian Health Care Services of Houston; Centerpoint Corp., Medshares and Medshares Holding, all of Memphis, TN; and their management firm, TBN of TN.
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