Healthlink, Related Firms File For Bankruptcy Debt Owed To Doctors, Hospitals Tops $10 Million, Court Papers Say

A local health care firm and two companies it manages filed for bankruptcy protection Friday because of debts of more than $10 million, mainly owed to doctors and hospitals.

HealthLink, the Northwest Medical Services Organization and the Northside Physician Hospital Network all filed for Chapter 11, minutes before the court closed. HealthLink is the management company for the two other corporations.

The filings allow the companies to try to keep creditors at bay while straightening out finances.

The companies, knitted together in a web, have been in financial turmoil for months.

Earlier this week, HealthLink laid off 76 of its 99 workers because of the problems. Last week, the company’s board asked its chief executive officer to resign and voted to bring in a consultant, Premier Inc., to try to solve the company’s woes.

Jeff Nelson has been named the interim chief executive officer of all three companies. Nelson works in the consulting division of Premier, an alliance of nonprofit hospitals and health systems from across the country. Nelson wasn’t available for comment Friday.

HealthLink, 140 S. Arthur, essentially acts as a subcontractor to insurance companies, taking the bulk of health insurance premiums and almost all the risk.

Until the financial problems exploded, HealthLink paid for the care of about 46,000 Eastern Washington residents enrolled with four insurers.

But Providence Health Plan, NYLCare and QualMed Health Plan all have canceled their contracts with the companies connected to HealthLink because bills haven’t been paid to health care providers.

As of Sunday, care for people enrolled in those plans will be paid for by their original insurers.

Only PacifiCare of Washington will still cover enrollees through HealthLink. That’s as many as 20,000 people.

The bankruptcy filings are three different board actions. But they’re all tied together.

The Northwest Medical Services Organization, or NMSO, and the Northside Physician Hospital Network, or PHN, claimed most of the major debts.

They owe about $2.3 million to Sacred Heart Medical Center, $1.8 million to Deaconess Medical Center and $1 million to Valley Hospital and Medical Center.

The NMSO and the PHN also owe almost $4 million to the four former Dominican Network hospitals that actually helped form the PHN. That includes $2.9 million to Holy Family Hospital, the major hospital in the former Dominican chain.

HealthLink owes about $147,000 to Holy Family.

The three companies also owe hundreds of thousands of dollars to doctors. But many of the debts claimed by the corporations are less than the doctors say they’re owed.

For instance, the NMSO and the PHN say they owe about $371,000 to Inland Imaging. But Inland Imaging says it’s owed at least $800,000.

HealthLink says it owes about $151,000 to the Spokane Eye Clinic. But Spokane Eye Clinic says it’s owed at least $400,000.

North Side doctors formed the NMSO about seven years ago to try to improve community health and take control of medical decisions from insurance companies.

Some of those doctors and the hospitals that were in the Dominican Network formed the PHN for the same reasons. The Dominican Network hospitals have since affiliated with Sacred Heart Medical Center and Providence Services Eastern Washington.

The NMSO and the PHN formed HealthLink about two years ago to manage contracts and business.

A press release from HealthLink Friday afternoon says the companies filed for bankruptcy to ensure continued health care delivery to Eastern Washington patients.