Integrated Health seeks to lighten debt

Sale of assets among possibilities for Sparks company

Nursing homes

March 25, 2000|By M. William Salganik | M. William Salganik,SUN STAFF

WILMINGTON, Del. -- Integrated Health Services Inc. hopes to use its bankruptcy reorganization to "restructure the balance sheet through deduction of debt load," Daniel J. Booth, senior vice president of finance, told a creditors' meeting yesterday.

Booth said a sale of assets was being considered, but "it's a little early to say exactly what we're going to do."

The Sparks-based nursing home chain had said more than a year ago that it might sell its RoTech division, which provides home respiratory services and durable medical equipment.

Marc D. Rosenberg, a New York attorney representing IHS, said, however, that there are "no present discussions" aimed at selling RoTech.

Among other courses of action being considered, Booth said, are restructuring of leases and other reductions in cost. He said IHS had eliminated "thousands of positions," primarily for contract therapists, over the past year after the federal government reduced Medicare-reimbursement rates. IHS had about 86,000 employees, including about 1,500 at its Sparks headquarters, before the cutbacks began.

Booth said he did not have a count of how many jobs had been cut since IHS filed for Chapter 11 bankruptcy protection Feb. 2 in federal court in Delaware, where it is incorporated.

Besides the cutback in Medicare payments, Booth said, another factor contributing to the decision to file for bankruptcy protection was a heavy debt load. IHS grew rapidly through acquisitions, but became highly leveraged in the process, with debt topping $3 billion.

Its problems are typical of large nursing home chains. Three others filed for bankruptcy before IHS. Yet another chain, Genesis Health Ventures, based in Pennsylvania but with extensive operations in Maryland, said this week that it had missed a $3.8 million debt payment and was entering restructuring discussions with its lenders.

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