A Knoxville-based health system that has purchased hospitals from Community Health Systems Inc. is seeking bankruptcy protection.
Curae Health Inc. and its three Mississippi hospitals all filed for Chapter 11 bankruptcy on Aug. 24, according to filings with the United States Bankruptcy Court for the Middle District of Tennessee.
Franklin-based CHS (NYSE: CYH), Nashville’s second-largest publicly traded health care company, sold the three facilities and a Florida hospital to Curae in September 2016 for $51 million, according to the filings. Curae currently owes CHS more than $28.6 million, according to its bankruptcy filing.
The facilities were among the first CHS sold as part of its plan to pay down debt following the $7.6 billion purchase of Florida-based Health Management Associates in 2014. The company has now sold more than 30 hospitals.
Becker’s Hospital Review reported that in court documents, Curae President and CEO Stephen Clapp said the purchase of the three hospitals made financial sense at the time but that their revenue dropped dramatically after the transaction closed. The company also struggled to pay for new electronic health record systems.
“This was a result of using CHS information systems longer than anticipated and the inability to secure permanent information system financing,” Clapp said in the filings.
The company and the three hospitals, which Curae plans to sell, have $96 million in liabilities and $3.4 million in cash, according to filings.
The Mississippi hospitals are: Gilmore Memorial Hospital in Amory, Panola Medical Center in Batesville and Northwest Mississippi Medical Center in Clarksdale.
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