Citing “severe financial distress,” American Hospice Management Holdings has filed for bankruptcy protection so it can sell its money-losing business in the next six weeks.

The provider of hospice care in seven states has been seeking a buyer since March 2013. In filing Chapter 11 on Sunday, it said an expedited sale through a bankruptcy proceeding “would best preserve the underlying value of its operations and maximize the value of [its] assets” for the benefit of creditors and shareholders.

Hospice Partners of America has made a “stalking horse” bid to acquire American Hospice’s operations in Virginia and Texas. Additional bidders will be sought for the operations in Arizona, Florida, Georgia, New Jersey, and Oklahoma, and the sale process must close by April 30, according to the company.

“In the past few years, we have found ourselves working under the burden of an increasingly challenging regulatory environment coupled with rapidly changing market conditions,” American Hospice CEO Scott Mahosky said in a news release. “We now face the undeniable reality that selling our operations to those with strong capital structures will prove a better outcome for all of our stakeholders.”

As Dow Jones reports, American Hospice began a search for a buyer after it agreed to pay $12 million to resolve allegations it made false claims to Medicare for ineligible hospice services. More than 90% of its revenue comes from Medicare.

“The company’s Arizona unit was accused of inflating bills, pressuring staff to find more patients eligible for Medicare, and delaying and discouraging staff from discharging patients from hospice when the end-of-life care services were no longer appropriate,” the WSJ said.

In 2015, American Hospice lost $4.7 million on revenue of about $57 million. “The debtor is currently not profitable and its liabilities vastly exceed its assets,” it said in court papers.

The creditors include 2000 Riverside Capital Appreciation Fund, which bought $8 million of American Hospice’s secured debt earlier this month. The company also owes $5.5 million to the Department of Justice and about $4.2 millio to trade vendors.

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4 responses to “American Hospice Management Files Chapter 11”

  1. I worked for American Hospice. So not surprised this is happening. Should have taken place a lot sooner. Poor management through the years of my employment. Many different administrators over the years.

  2. Glad I walked away with a severance. Feel sorry for my co-workers who stayed & will get nothing. Watched many things thru out the years of being employed with American Hospice. I worked with great people … Let’s just say Karma is real.

  3. Extremely poor clinical management & negative workplace culture. Lots of “scared” employees; as well as employees skilled at getting co-workers in trouble with lies & exaggeration. Saw this bankruptcy coming. It could’ve been avoided. Maybe… just maybe… if all employees were treated with kindness, compassion & fairness, the company’s reputation could’ve recovered after the whistle blowing $12 million settlement. American Hospice Co. had the potential to be the top hospice services provider. So much for “re-onboarding”.

  4. My husband died at Embracing Hospital in Georgia. I felt that I was pushed into transferring him from the hospital to hospice by the representative who kept trying to “put words in my husband’s mouth.” I am literally sick and ashamed to have allow my husband to pass away at Embracing Hospice. I knew nothing of this bankruptcy situation when my husband died on October 17, 2015. Things are beginning to make sense. My husband had Medicare, which is 90% of the revenue for American Hospice company. He was only there for 15 hours, but they were without a doubt the most deplorable 15 hours my husband and I had ever spent. There was no sign of professionalism. I have many unanswered questions about those 15 hours, but with the bankruptcy, I will never know why the staff lied about services my husband reportedly was given, when in fact very little of their reports were true. I needed desperately to talk with the nurses on duty at the time of my husband’s death, but now I will have to live with tangling questions, especially why I allowed the representative to talk me into something I knew absolutely nothing about, Embracing Hospice. My dear husband did not deserve to spend the final 15 hours under those horrid conditions.

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