(BDN) -- A community hospital in Lincoln filed for bankruptcy protection Tuesday, citing steep declines in patient admissions in recent years amid a larger economic downturn in the Lincoln Lakes region.
Penobscot Valley Hospital, a 25-bed critical access facility, will remain open as the Chapter 11 bankruptcy filing makes its way through federal bankruptcy court. No layoffs are planned, and the hospital’s 165 workers will continue to receive paychecks, hospital CEO Crystal Landry said.
The hospital has seen in-patient admissions drop 65 percent over the last four years, along with a 10 percent decrease in overall patient volume, Landry said.
The hospital said its lower patient numbers were among “the ripple effects” of the closure of the Lincoln Paper and Tissue LLC mill, then the town’s largest single employer, in 2015. In addition, the hospital said a lack of Medicaid expansion in Maine and cuts to Medicaid reimbursement rates have hurt its bottom line.
“We have made tremendous strides over the last three years in bringing our operational costs in line with revenue. Legacy debt is the issue here, and Chapter 11 allows us to restructure that debt so we can keep our doors open and ensure that our community continues to have a hospital close to home,” Landry said.
The bankruptcy filing should have “minimal impact” on hospital operations, according to a statement from the hospital.
The hospital hopes to emerge from the bankruptcy process, which can take 12 to 18 months, in a stronger financial position, Landry said.
“Healthy patient outcomes remain our number one priority,” said Dr. Paul Turnquist, president of the hospital’s medical staff.
Penobscot Valley Hospital is among the first hospitals in Maine to file for Chapter 11 protection. Parkview Adventist Medical Center in Brunswick filed for Chapter 11 in 2015, and Mid Coast Hospital in Brunswick later bought it. Ten hospitals nationwide filed for bankruptcy last year, according to Becker’s Hospital CFO Report.