About The Study

Industry: Healthcare

Services:
  • Management Services
    • Crisis
    • Interim
    • Operations
    • Strategic

Situation

The health system’s financial management did not adapt to the institution’s growth. The medical system first went into bankruptcy in 2005, only to emerge in 2007 saddled with debt that would ultimately force the entity back into bankruptcy protection.  Since January 27, 2010, ToneyKorf has led one of the largest and most complex Chapter 11 bankruptcies in the healthcare industry. Engaged to guide the historic Saint Vincents Catholic Medical Centers of New York (SVCMC) through its restructuring and subsequent Chapter 11 bankruptcy, Mark Toney was installed as Chief Restructuring Officer and Steven Korf as Chief Financial Officer. Given the important mission that SVCMC served for the West Side of Manhattan and the greater New York community, and the complicated bankruptcy proceedings necessitated by the institution’s multifaceted collection of services, the engagement is a model of cohesive strategy and demonstrates the importance of balancing the complexity of the bankruptcy and the asset structure; compassion toward the patients, staff, and doctors, and the community; and effectively obtaining cooperation among the involved constituent groups.

Summary of Execution and Results

Pre and Post Petition (2010 – 2012)

  • Led communications with all key constituents: Unions, physicians, elected and state officials, press, etc.
  • Quickly identified and contained cash burn to allow for orderly disposition of assets.
  • Directed the efforts to find a new sponsor to keep the hospital open. When unable to find a new sponsor, we proceeded with the orderly and safe closure of the hospital.
  • Prepared a closure plan for the hospital and with the assistance of the medical staff safely discharged all patients.
  • Evaluated the specific factors affecting the businesses, focusing on state and city health regulations, regulatory approval hurdles, patient transition requirements and key targets given the regulatory and business environment.
  • Prepared an extensive plan for maintaining continued patient care and safety during the divestiture process.
  • Negotiated significant improvement over stalking horse bids, including higher prices, assumption of major liabilities, and continued employment for thousands of employees.
  • Achieved advantageous deal structures/combinations to maximize asset value and minimize risks with sensitive business lines.
  • Managed a wide array of human resource issues, including negotiating wage concessions, managing the headcount reduction process, terminating the defined benefit pension plan and the wind down of employee benefit plans to avoid or reduce significant exposures to various employee-related claims.
  • Negotiated agreements to store more than 300,000 cubic feet of patient medical records along with electronic patient health information for the legally required time periods to ensure access for patients for years to come.
  • Managed the sale of key real estate generating more than $260 million in proceeds.

Post Emergence (2012 to present)

  • Appointed as Responsible Officer as a part of the emergence Plan and retained various key leadership positions to provide management services to operate ongoing assets and to support wind down efforts for optimal creditor recovery.
  • Enhanced expected recovery to unsecured creditors from 2.3% to 24%, a ten-fold increase.
  • Administered the wind-down of Queensbrook Insurance Limited (“QIL”), a Cayman Islands-based Insurance Captive.
  • Settled remaining cases for less than reserves, resulting in a recovery for creditors over $45 million.
  • Settled hundreds of remaining medical malpractices trust cases established in the first SVCMC bankruptcy, resulting in excess of $20 million in recovery for creditors.
  • Resolved $461 million of disputed claims, resulting in $59 million in settlements of allowed claims – a reduction of 87%.
  • Developed and administered a risk-based, self-funded Medical Malpractice Tail Fund for SVCMC Doctors and Residents established to extend medical malpractice coverage beyond the expiration of the policies. Ultimately over 40% of the fund was returned to the participating doctors and the Estate after the settlement of all filed claims.
  • Identified and recovered over $2.4 million in unclaimed funds from various states.
  • Identified and sold “lost” real estate related to a Brooklyn hospital closure during the first SVCMC bankruptcy, for approximately $1 million for the benefit of unsecured creditors.
  • Operated and improved the management and profitability of US Family Health Plan (“USFHP”), a $120 million managed care program operated for the Department of Defense, which provides healthcare benefits to approximately 14,000 military retirees and family members of active duty personnel across four states.

ToneyKorf continues to provide management and advisory services to the leadership and operations of USFHP, QIL, and Post Effective Date SVCMC.

TKP is unique among consultants: excellent personal service and very invested in the client. They do not consider themselves consultants, but rather part of the entity with which they are working.
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