Green Valley Hospital laid off about 60 employees Tuesday, less than a week after emerging from Chapter 11 bankruptcy. The hospital also has been renamed Santa Cruz Valley Regional Hospital.
Notices handed out to employees Tuesday said the hospital “has experienced significant financial difficulties” over the past several months, and efforts over the past year “have not resulted in long-term sustainability.”
Laid off workers were given one week's severance and were told they could apply if the positions are reinstated.
Despite the layoffs, “the plan is to grow,” CEO Kelly Adams told the Green Valley News on Tuesday. “This is such a wonderful facility, and the community respects the hospital.”
Adams said 60 was a “ballpark” final figure for the layoffs, which will be completed by the end of the week and affect all departments.
“After coming out of bankruptcy, the hospital has been in a financial loss situation,” he said. “So this is, if you will, a correction of staffing and we'll be looking at a number of other items as well.”
Adams said the cuts will not affect services, “and, in fact, we'll be increasing services” depending on physician recruitment.
He said when the layoffs are over, the hospital will have 250 to 260 employes.
When asked about the possibility of layoffs in May, Adams said the hospital had 250 full-time workers at that time.
Green Valley Hospital opened in May 2015 with 49-beds, a restaurant, coffee bar and gift shop. But from the beginning the hospital, which never had an operator, struggled to fill beds and recruit and retain specialists, although residents clearly enjoyed having a hospital in the community.
The hospital filed for bankruptcy in April 2017 to get out from under crushing debt and to secure long-term financial stability. The bankruptcy case was finalized on July 25.
At the time of the filing, then-CEO John Matuska said the hospital was overbuilt and undercapitalized, and that the filing would “clean up the massive amount of debt at a high interest rate, plus fees” incurred since it opened. Chapter 11 allows an organization protection from creditors as it reorganizes.
Total liabilities were $88 million when a hospital of its size should have debt of about $37 million, he said.
In February, U.S. Bankruptcy Court in Phoenix approved the purchase of the hospital by Lateral GV, an offshoot of the California equity firm Lateral Investment Management, the lone bidders on the property.
In May, Lateral announced that Adams would replace Matuska, becoming the hospital’s fourth CEO in three years.
Adams is founder and partner of ERH Health Care, a Salt Lake City company that helps underperforming and distressed healthcare organizations, including five general acute care hospitals in Georgia.
Following the announcement, Adams and Kirk Olsen, another ERH partner, had nothing but glowing remarks about the future of the hospital.
The men said 17 physicians recently were granted privileges, proving people believe in the hospital and want it to succeed.
The number of patients, particularly in the emergency room, are on the rise, Matuska said then. There were 15,000 visits last year, while the ER sees about 45 patients per day.
Adams said he planned to do what Matuska had tried to do – convince doctors to spend more time on the hospital campus so patients don’t have to drive to Tucson.
At the time, the men said one possible outcome is for the hospital to become an extension of a Tucson hospital.
Two weeks later, Northwest Healthcare announced it will build an 18-bed acute care facility in Sahuarita.
Officials at Green Valley Hospital were unaware of conversations with the town regarding how a new facility could impact their operations.
“To put another hospital into a community this size really makes no sense,” Adams said Tuesday. “Whoever came up with that idea didn't do their Community Health Needs Assessment.”
He said the name was changed because it's under new ownership.
“I think the new name reflects the wider scope – we want to attract ourselves to the entire Santa Cruz Valley, from Nogales all the way to Tucson.”
Making sure the community embraces Adams’ leadership is the key to the overall success of the facility, said Don Weaver, chair of the Green Valley Hospital Advisory Committee.
After a business exits Chapter 11 bankruptcy it’s normal to see a name change, he said, but this case is especially important.
Weaver said he believes the name change will help attract residents to use the facilities in neighboring communities like Sahuarita.
Moving forward, Weaver said the hospital will be looking to offer additional services like physical therapy.
“I think the hospital should definitely be in that business,” he said, adding the focus now is to create stability both strategically and fiscally.
Reporter David J. Del Grande contributed to this story.