Situation

Milford Health and Medical, Inc. (“Milford”) was a not-for-profit corporation in Milford, CT, that included an acute care community hospital, home care agency, captive insurance company, and medical office buildings primarily used for healthcare services.  Milford was an important contributor to the local economy with approximately 700 employees.  Milford was financially and operationally struggling for several years despite cost-cutting measures, reductions in clinical service offerings (such as obstetrics and gynecology), and limited infrastructure investments.  With significant financial liabilities stemming from combined operating losses of more than $41 million over the past five years, inadequate patient revenue, and a very low average daily patient census, Milford had reached the point of facing potential bankruptcy and closure.   With the sudden departure of previous management in June 2018, the Board retained ToneyKorf as Chief Restructuring Officer/Chief Executive Officer and various director-level positions to assist the Company in implementing organizational improvements, lead the day-to-day operations, and prepare the organization for a merger and integration into a new system.

Summary of Execution and Results

ToneyKorf evaluated various strategic options primarily focusing on the maintenance of a quality community hospital, securing the employees’ pension plan, retaining quality employees and medical staff, and addressing Milford’s significant financial liabilities.  ToneyKorf held continuous meetings and negotiations with Yale-New Haven Health’s (“YNHH”) executive leadership and counsel working toward an out of court restructuring, which closed in June 2019.  The transaction included all of the active entities excluding the offshore captive insurance provider to YNHH / Bridgeport Hospital.  The transaction resulted in:

• A commitment of at least $50 million for clinical program development and facility and infrastructure improvements including the development of a state-of-the-art center for gerontologic health that will address the diseases of aging;
• Preserving the employment for 700 families, including full-time, part-time, and per diem employees;
• Preserving the pensions for more than 850 retirees through negotiating that the buyer would assume the liabilities estimated at $30.4 million;
• Winding-down the Captive insurance company and “Old Co” entities in an orderly manner; and
• Maintaining hospital services in the Greater Milford community.

While negotiating the transaction ToneyKorf’s professionals also implemented various improvements, including:

• Taking control of the cash operations, developing a 13-week cash flow forecast, managing purchasing and cash disbursements, and settling numerous liabilities including vendors, excess employee paid time-off obligations, executive liabilities, and physician contracts.
• Recruiting and negotiating new agreements with providers of general surgery, orthopedic trauma, radiology services, and intensive care as well as recruited key clinical leadership positions including Chief Medical Officer and Chief Nursing Officer to stabilize and improve clinical operations.
• Implementing mandatory training for all employees and medical staff on High Reliability Organization, Active Shooter, and Violence in the Workplace topics.
• Overseeing the opening of a new hospital pharmacy, and building a transportation department.
• Collaborating with the Buyer to begin planning for implementation of Epic, a state-of-the-art electronic health records system.

In October 2019, Milford Health and Medical, led by ToneyKorf Partners, completed the stock sale transaction of Seaside Indemnity Alliance Company, the Cayman Island-based captive insurance company, to the Fairfax Companies (U.S.). This transaction completes the sale of all assets of Milford Health and Medical.

Watch clips from the signing ceremony here: