Hospital’s bankruptcy filing puts community on edge

Posted at 1:08 PM, Dec 04, 2012
and last updated 2012-12-04 13:19:30-05

BEDFORD-STUYVESANT, BROOKLYN (PIX11)—More than a quarter million people a year rely on Interfaith Medical Center in order to stay healthy and to stay employed — the hospital’s more than 1,500 workers make it the largest employer in Bedford-Stuyvesant, Brooklyn. On Monday, the hospital filed for Chapter 11 bankruptcy protection, leaving the many people who depend on the institution that’s long been strapped for cash seeking answers.

“I was born in this hospital,” Bed-Stuy resident Kevin Davis told PIX11 News as he talked about the need to keep the 287-bed facility open. His next statement indicates the institution’s importance to its surrounding neighborhoods.


On Monday, the hospital filed for Chapter 11 bankruptcy protection.

“My friend got shot Saturday morning,” Davis said, “and if this hospital was not here, he might not have been here [alive].”

Now, however, the health of the hospital itself is in question, and the bankruptcy filing underscores its need to get its financial house in order. A published debt of over $130 million to New York State also indicates how serious the hospital’s fiscal situation is.

Comments from people like Shaniqua Brown, who rely on the hospital, show the need for it to stay afloat. Brown’s two year-old daughter had just been treated for an asthma-related condition at Interfaith when she spoke with PIX11 News.

“Everybody lives close to this hospital,” she said. “It’s important for this hospital to stay open.”


City councilmember Letitia James predicts crisis if the two sides don’t end up seeing eye to eye on how to keep Interfaith in operation in a financially sound way.

Interfaith’s problem is rooted in New York state government’s fiscal woes. Faced with a multi-billion dollar budget shortfall, Gov. Mario Cuomo organized a team of financial and health care ombudspersons to determine how to reduce state spending on Medicaid, the program which helps to pay for health care for poor and elderly patients.

That team, called the Medicaid Redesign Team, recommended that Interfaith, which relies heavily on Medicaid payments to finance its operations, merge with Brooklyn Hospital, whose books show it to be in far better fiscal condition than Interfaith.

Interfaith chose to reject that recommendation, choosing instead the bankruptcy filing, which required months of advance legal planning. The hospital said, through a spokesperson, that the filing allowed it to retain control of its destiny in a way that no other option would.

The institution felt that its autonomy was particularly important, considering the financial challenges it now faces. “Because the people we serve are predominantly poor and fully 65% are dependent on Medicaid or Medicaid-managed care we have had… a financial challenge of being dependent on the State’s Medicaid reimbursements,” the medical center president and CEO, Luis Hernandez said in a written statement.

A hospital spokesperson told PIX11 News that the Chapter 11 filing will free the institution to negotiate repayment of its debts, at a rate lower than dollar for dollar.

Ironically, however, the hospital’s biggest creditor by far is the State of New York. So Interfaith will have to try and negotiate over $130 million in debt with part of the entity that had recommended that the hospital cede its financial control to the management of another hospital.

The bankruptcy does not mean that the hospital will close. It anticipates operating in much the same manner it had been before the filing, including not having malpractice insurance, which it was forced to drop months ago due to the high cost.

In theory, at least, both Interfaith and the Cuomo Administration claim they are working to keep the hospital open and on sound financial footing. They clearly differ on how to accomplish that goal.

City councilmember Letitia James, whose constituents rely on the hospital, predicted crisis if the two sides don’t end up seeing eye to eye on how to keep Interfaith in operation in a financially sound way.

“The fact is there’s a great need in Central Brooklyn because of the health care disparities [here]” James said.

The hospital said in a statement that it intends to operate normally under Chapter 11, however, bankruptcy filing by other health care institutions in the past have not kept them from eventually closing.