New York hospital bankruptcy case goes to mediation

November 19, 2013 9:15 pm Published by

On November 13, a bankruptcy judge in New York ordered that a case involving Interfaith Medical Center would go into mediation. This process will be supervised by a U.S. bankruptcy judge from the Eastern District of New York, and reports said that the ultimate goal of such actions is to reach an agreement that falls somewhere between the facility’s complete closure and the preservation of the care center as is.

The hospital filed for Chapter 11 in December 2012 after the state had rejected its proposed restructuring plan. During that year, it hosted 11,000 inpatient visits and treated 250,000 outpatients. The judge’s recent deferral of a final decision follows in the wake of multiple adjournments that occurred during earlier negotiations.

Advocates for the hospital said that the bankruptcy case had political motivations, claiming that the New York Department of Health and the Dormitory Authority of the State of New York could gain the ability to change Brooklyn health care policy indirectly by closing the hospital. DASNY, which provides financing and construction services to colleges and health care institutions, is the facility’s largest secured creditor. Analysts noted that the state’s current plan to close services such as inpatient psychiatric beds and surgery might lead to a greater profit reduction than the hospital would experience if it closed the outpatient facilities that were planned to remain operational.

Bankruptcy proceedings involve complex negotiations. Firms and other organizations that serve communities may find that the demands of their creditors aren’t the only issues in play. In this particular case, the bankruptcy judge noted that the support of the medical center’s largest creditor was necessary in order for any agreement to be reached.

Source: Brooklyn Eagle, “Brooklyn judge orders mediation in Interfaith bankruptcy case“, Mary Frost, November 14, 2013

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