Spectrum Healthcare, operator of six Connecticut nursing homes, has filed for Chapter 11 bankruptcy reorganization, blaming declining Medicaid reimbursements and a tough economy for the company’s inability to pay its bills, court records show.
Under Chapter 11, a company is shielded from creditors while it works out a court-approved plan to repay creditors.
Spectrum, which owns nursing homes in Hartford, Manchester, Derby, Ansonia, Winsted and Torrington, filed for bankruptcy Monday in Hartford citing in up to $500,000 in assets and up to $10 million in liabilities.
The action comes a little over a year after contentious contract negotiations between Spectrum and its unionized workforce came to a head with a new agreement.
Deborah Chernoff, a spokeswoman for New England Health Care Employees Union, District 1199 of SEIU, which represents some Spectrum workers said she was told about the bankruptcy Monday. Before that, there were no discussions about the legal move.
“They didn’t tell us anything about it,” Chernoff said.
Attorney Elizabeth Austin, who is representing Spectrum, did not immediately return a call seeking comment.
In its bankruptcy filing, Spectrum said it is unable to pay its debts blaming reductions in Medicaid rates and the state’s “Money Follows the Person,” program for reduced revenue and patient volume.
The “Money Follows the Person,” program is an initiative that aims to push seniors out of nursing homes and into community care in a bid to reduce health care costs.
An unstable economy has negatively impact Spectrum as well, the company said, as fewer people are choosing elective surgeries.
Spectrum’s six nursing facilities have 716 beds and employ 725 employees. About 420 employees are part of a union.
Spectrum’s monthly payroll is about $3.1 million, court records show.
