Vencor Files for Bankruptcy
LOUISVILLE, Ky. (AP) _ Vencor Inc., one of the nation’s largest nursing home chains, has filed for protection under federal bankruptcy laws, citing rising debts due to declining Medicare fees.
Vencor, which operates 300 nursing homes and 38 hospitals in 46 states, said today as it filed for Chapter 11 protection in Delaware that it is in negotiations with the U.S. Justice Department concerning the government’s outstanding claims against the company.
The company said it has a reorganization plan that includes renegotiated loans with banks. Additionally, the company said it has obtained $100 million in financing under a bank agreement led by Morgan Guaranty Trust Co. of New York. The financing, pending court approval, will be used for ongoing operations.
Vencor had a $15.2 million second-quarter operating loss. Vencor’s total debt was $875 million as of June 30, up from $775 million on Dec. 31.
Vencor said its 1999 revenue has been hurt by the government’s revamped reimbursement system to care for Medicare patients. Medicare last year began phasing in a payment system in which nursing homes are paid a set fee based on the patients diagnosis, regardless of the length of admission. Traditionally, Medicare paid nursing home a daily rate.
Medicare also has drastically limited coverage for rehabilitation therapy services, which most nursing homes began to provide in recent years to supplement revenues.
Several large nursing home chains across the country are struggling financially following the Medicare payment changes.
Vencor said it has also suffered because of less demand for nursing home care.
After Vencor’s stock fell by more than 96 percent this year, Vencor shares were delisted from the New York Stock Exchange in June and currently trade on the over-the-counter bulletin board.