Operator of Lake Shore Health Care Center files for bankruptcy - The Buffalo News

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Operator of Lake Shore Health Care Center files for bankruptcy

The operator of Lake Shore Health Care Center in Irving filed for bankruptcy protection Monday afternoon, after losing more than $9 million so far this year and receiving nearly $4 million in life support from an affiliated hospital in Dunkirk to keep it alive.

TLC Health Network, which runs the Chautauqua County hospital and several other health care facilities, filed for Chapter 11 bankruptcy in U.S. Bankruptcy Court for the Western District of New York.

The bankruptcy petition appears to be a last-ditch effort by the hospital’s owners to stave off a shutdown and find a solution. Unlike a Chapter 7 bankruptcy – in which a business shuts down and liquidates assets to pay off what it can, a Chapter 11 filing allows a business to develop a plan to repay creditors and improve operations.

But it doesn’t appear to change the plans to close the hospital by the end of next month, unless it can find a buyer.

TLC is itself a part of the Lake Erie Regional Health System of New York, or LERHSNY, which formed in 2008 after the merger of the original TLC and Brooks Memorial Hospital in Dunkirk. TLC operated Tri-County Memorial Hospital in Gowanda, which closed after devastating flooding. Besides the Irving hospital, it operates the Gowanda Urgent Care & Medical Center and several outpatient facilities.

Neither Lake Erie Regional nor Brooks is included in the TLC bankruptcy filing, which was approved by the Lake Erie and TLC boards Oct. 29. However, it’s intended to prevent the same fate from befalling them.

Hours after the filing, Lake Erie Regional revealed that it has lent TLC $3.7 million so far this year from Brooks Memorial, which itself generates $42.9 million in annual revenues but expects to lose $1.8 million this year.

Meanwhile, TLC lost $9.1 million from operations so far this year – $6 million more than budgeted due to a shortfall in patient revenues – and $16.7 million from 2008 through 2012, for a total of $25.8 million.

Monday evening, executives made clear that they will no longer support TLC’s deteriorating finances. Lake Erie lost $10.5 million in 2013.

“Our board has done so much already, and let’s be clear: Without Brooks and LERSHNY, Lake Shore would have closed months ago,” Christopher J. Lanski, Lake Erie Regional’s chairman, said in an emailed statement. “Now the well is dry. We cannot and will not endanger Brooks’ status any further.”

The network has previously announced its intention to close the hospital Jan. 31 because of continuing losses, and recently filed a request with the state Health Department to move up the closing date for the hospital, nursing home and Conewango Clinic to Jan. 14 if additional funding is not found.

A Health Department spokesman said he could not comment on the bankruptcy.

The hospital’s filing estimates future revenues of $2 million per month and future expenses of $3.4 million per month, leaving an annual deficit of $16.8 million.

Lake Erie regional said that discussions with prospective buyers – including at least one local group – are continuing but that officials have not received an “adequate purchase price” and interim financing until a deal closes. In the meantime, reorganization will let it continue operating in three counties, with construction continuing on its Gowanda clinic.

email: swatson@buffnews.com and jepstein@buffnews.com

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