HomeHealth Care NewsDallas-Area Hospital Files Bankruptcy Two Years After Opening

Dallas-Area Hospital Files Bankruptcy Two Years After Opening

Trinity Regional Hospital Sachse (Texas) filed for bankruptcy in late August, just two years after opening.

The hospital, located about 26 miles northeast of Dallas, defaulted on $70 million of municipal bonds issued in 2020. Trinity Regional’s owner listed assets of $50 million to $100 million and liabilities of $100 million to $500 million, on its bankruptcy petition.

The nonprofit, 32-bed hospital with surgical services, an emergency department, and both inpatient and outpatient care, is the most recent to file for bankruptcy, joining five other hospitals filing earlier this year.

Hospital Still Open

Trinity Regional is still open and operating with the same level of excellence as when it started and aims to find a buyer, says Jon Nash, chief restructuring officer for the hospital.

“There is nothing bad or wrong about this hospital,” said Nash. “It’s a beautiful facility with state-of-the-art equipment throughout. It’s in a bedroom community with a population that is growing quickly. It just started without an appropriate amount of start-up capital and a good strategy.”

Problems with the COVID-19 lockdowns, construction costs, and hospital personnel working remotely, contributed to the financial difficulties leading to the bankruptcy, says Nash.

“We have filed a motion for the sale to proceed,” said Nash. “Anyone is welcome to make an offer—we’re selling all the assets free and clear of any liens and encumbrances.”

Rural Hospitals Closing

Many hospitals will never be able to recover from their pandemic financial losses and, as a result, there will be a big spike in hospital bankruptcies, according to Natalie Schibell, M.P.H., vice president of product marketing at Zyter|TruCare and a former vice president and research director at Forrester Research.

In a Forrester Research report, Schibell states that more than 30 percent of all rural hospitals are at immediate risk of shutting down because of low financial reserves and reliance on government aid.

Schibell told MedCityNews there is a lot of risk in rural areas, where closures accelerated in the 2000s.

“[S]ince 2013, we’ve seen 100 rural hospital closures,” Schibell said. “There’s just low patient volume in those areas. And people are now traveling further to hospitals, because many of them have closed down.”

‘Difficult To Thrive’

Though the COVID-19 pandemic has ended, smaller hospitals are still at risk—and larger independent hospitals in urban areas face their own unique challenges, says Nash.

“Larger systems will continue to grow because they have the funds to weather any storms,” said Nash.

Nash says the financial troubles of these hospitals are the result of a bevy of problems outside their purview.

“Health care is becoming an ever-increasing portion of GDP (gross domestic product) and our Byzantine regulations that create impenetrable layers of bureaucracy make it difficult to thrive in any part of the health care system,” said Nash. “The problems are so complex; I really don’t see a solution.”

‘Investors Making Bad Decisions’

It is widely reported and agreed that the management of Trinity Regional Hospital made several missteps in the hospital’s development and opening, says Merrill Matthews, Ph.D., resident scholar at the Institute for Policy Innovation.

“Among its challenges, pandemic-related construction costs exploded and supply-chain snarls also hindered its completion, but also (it) initially failed to meet some hospital-related building codes,” said Matthews. “With Sachse being so close to Dallas and its major suburbs, it was difficult to recruit physicians who would bring in the needed patients, even as labor and borrowing costs were rising.”

There are obstacles to providing health care in the country, but Trinity Regional had difficulties of its own making, says Matthews.

“While rural hospitals are facing a number of challenges, including low Medicare and Medicaid reimbursements and numerous federal mandates increasing costs—such as requiring a fully equipped emergency room that may see very few patients—Trinity’s failure may be more of a case of investors making bad decisions, and paying a financial price for it,” said Matthews.

Plans Go Awry

Trinity Regional’s bankruptcy was the perfect storm of bad timing and poor planning, says Devon Herrick, a health economist and policy advisor to The Heartland Institute, which publishes Health Care News.

“The project was initiated in 2020 during COVID, a pandemic tsunami that pushed many hospitals into the red,” said Herrick. “After COVID let up and the hospital opened, it faced the problems of inflation, supply chain bottlenecks, and higher labor costs. It also had trouble recruiting doctors. … Trinity had planned to expand the campus with medical office buildings at a later date, which is where physicians would have their offices.”

The hospital faced a litany of other problems, including high interest rates on the bonds it used to finance the facility, and the high cost of leasing the land underneath (purportedly $2 million a year), says Herrick.

“It was also rather small for a hospital—only 32 beds,” said Herrick.

Trinity Regional also faced construction delays and some licensure problems that prevented it from treating those covered by Medicare and Medicaid when it first opened. Also, at the time, its intensive care unit was not operational, and later had to be reconfigured and renovated, losing months of valuable time, says Herrick.

“The restructuring officer, whose job it is to get the facility ready for sale, claimed its launch was poorly planned and lacked a coherent operational and startup strategy,” said Herrick. “Trinity had positioned itself in a fast-growing region northeast of the Dallas metro area. While (that is) a good long-term strategy, it didn’t help keep it afloat in the short term.”


Kenneth Artz (KApublishing@gmx.com) writes from Tyler, Texas.



Kenneth Artz
Kenneth Artzhttps://www.heartland.org/about-us/who-we-are/kenneth-artz
Artz has more than 20 years’ experience in nonprofit organizations, publishing, newspaper reporting, and public policy advocacy.


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