Understanding ownership split for Springfield Hospital, clinics 'Working relationship' between the two to continue, CEO says

By Shawn Cunningham
© 2020 Telegraph Publishing LLC

The interim CEO of Springfield Hospital says that that organization is not cutting its ties with the network of area clinics, as has been previously reported.

Michael Halstead told The Telegraph in an interview last week that the changes that will occur when Springfield Hospital comes out of Chapter 11 will only mean a different ownership structure, but it will not change the working relationship between the hospital and the clinics.

Currently, Springfield Medical Care Systems Inc. owns Springfield Hospital Inc. and the network of clinics that serve Chester, Londonderry, Ludlow, Rockingham, Springfield and several other towns in the region. Those clinics provide everything from family medicine to dental to mental health services, among others.

However, SMCS and Springfield Hospital entered bankruptcy separately and when they exit Chapter 11 later this summer they will be run – both operationally and financially – independently of each other. In effect, SMCS will run the clinics and Springfield Hospital will be run by Springfield Hospital Inc.

In describing the set-up, Halstead said in an interview at the hospital on Thursday, “Springfield Hospital is this building and all the doctors who operate in this building, all the specialists, the surgeons, the GYNs, urologists, the emergency room doctors, the anesthesiologists.”

He added, “The clinics — where patients see their primary care doctors — are owned by Springfield Medical Care Systems, which is a Federally Qualified Health Center.” That designation gives the clinics a number of advantages, including enhanced reimbursements under Medicare and Medicaid and eligibility for a number of federal programs and grants.

Clinics begin to see black ink

The eight SMCS clinics serve about 30,000 patients with approximately 122,000 visits in 2019. SMCS expects to file its bankruptcy exit plan in the spring and, according to Halstead, the reorganization does not include cutting services beyond what has been done so far.

Halstead said that SMCS has already looked at the services that are in demand from the community and eliminated some that are not — including plastic surgery and hypnotherapy. After that, he said, changes at the clinics are expected to be few.

“This month — and a month is not a trend — but in January, the clinics were profitable,” said Halstead, noting that not all of them were, but that “as a whole” the group was in the black. “We’re not going to be in a situation where all of them are profitable because the volumes are different, but the goal is that all of them combined at least break even.”

Springfield Medical Care Systems owns the clinics as businesses. Halstead said that SMCS owns some of the related buildings while it leases others and, in the case of Mountain Valley in Londonderry, the Mountain Valley Health Council owns the building and SMCS operates it.

Chapter 11 exit plans and financial future

According to Halstead, the exit plans for both organizations should be filed in the next 60 to 90 days, then it will go through the court.

“We’re probably six to nine months from being out of bankruptcy,” said Halstead who believes that the hospital has the financial performance numbers to show that it can operate as it is when it comes out of bankruptcy.

Saying that the two organizations have a total overall debt in Chapter 11 of around $15 million, Halstead said, “We couldn’t operate with all that debt, we’d have to have some adjustment.” He wouldn’t speculate on how much debt the court would discharge and how much the organizations would have to carry out of bankruptcy.

According to Halstead, the split allows for the hospital and the clinics to look at options including joining with other health care organizations.  “We couldn’t do that if we were together,” said Halstead.

While he confirmed that Springfield will continue to look at working with other hospitals, including the group made up of Mt. Ascutney Hospital, Valley Regional Health in Claremont, N.H., and Dartmouth-Hitchcock in Hanover, N.H., Halstead said it may not be necessary.

Referring to an August 2019 VTDigger interview in which he said that the survival of the hospital was “virtually impossible” without a merger, Halstead said that that was no longer the case.  “I was feeling that way in August but we’ve found ways to provide services in a more economical way.”

“Healthcare is evolving and changing and we want to stay on top of that,” said Halstead, “so we look at the options to see if we could provide services in a better way with partners.”