An article in Stanford Advocate reports that an audit by the State of Connecticut suggests that nursing home owner Marathon Healthcare is under financial hardship and facing bankruptcy. According to the article, Marathon Healthcare runs seven nursing homes including Marathon-Springfield which is a 127 bed facility located in Springfield Massachusetts. According to the report, the Springfield facility is for sale. Here is an excerpt from the article:
Nursing home firm finances called shaky
By Brian Lockhart
Staff WriterMarch 6, 2008
A state audit has concluded that East Hartford-based Marathon Healthcare, which runs seven nursing homes, including one in Norwalk, is under financial hardship and could be facing bankruptcy.
But John McCormick, the Department of Social Services employee who performed the review, did not recommend the state go to court to assume control of the company.
“It is my opinion that the appointment of a receiver is not the appropriate action at this time,” McCormick wrote in his final report, released yesterday by the department.
[. . .]
The chain continues to provide high-quality patient care and already was addressing some of the financial issues cited in the audit, he said. He blamed the problems in part on late Medicaid payments from the department.
“It is a significant factor,” Neagus said. “I don’t know if I can say we wouldn’t be having the conversation (about financial issues) but it would be a different conversation.”
But McCormick’s report concluded one of the biggest strains on the company’s finances is its Springfield, Mass., location, which is for sale.
“Marathon has been undermined by the funding of Marathon-Springfield (which) has drained $4.2 million in cash from the Connecticut facility,” McCormick wrote.
A spokesman for the Massachusetts Department of Social Services did not return a telephone call seeking further information.
The Connecticut Department of Social Services announced its audit of Marathon on Jan. 11 in response to a November financial statement that showed the company’s debt exceeded its assets by $3.3 million.
The department at the time reported that Marathon was dropped by contractors Quest Diagnostics and Swallowing Diagnostics last year after the businesses were not paid for their services.
And on Jan. 7, to ensure its staff was paid on time, Marathon asked the Department of Social Services for a $1 million advance for Medicaid reimbursements set to be paid to the nursing home agency the following week.
McCormick found several “red flags” at Marathon. He said the company, as of Nov. 30, had entered into verbal repayment agreements or promissory notes with vendors totaling $4.2 million and had other accrued expenses of $5.1 million.
At the same time, the chain, according to the audit, had over-borrowed its $6 million line of credit with Webster Bank by $549,204; it had incurred net operating losses of $386,516 as of September 2006 and $219,503 as of September 2007.
McCormick noted those losses were before distributions were made to Marathon owner Earle Lerner of $455,580 in 2006 and $253,924 in 2007.
“Marathon’s financial condition . . . does warrant extremely close monitoring by this department,” McCormick wrote. “The inability of Marathon to meet its current financial obligations may result bankruptcy action by creditors or by Marathon itself.”
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