Heywood seeks to exit bankruptcy

Photo | Christine Peterson Heywood Hospital in Gardner

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Heywood Healthcare, which operates hospitals and walk-in care centers in Gardner and Athol, filed paperwork to exit Chapter 11 bankruptcy on Tuesday.

The move comes just under eight months after the Gardner-based firm voluntarily filed for bankruptcy, following a challenging year where the healthcare company’s former CEO was removed from leadership, a planned merger with Worcester-based UMass Memorial Health was called off, and construction was paused on a $29-million surgical pavilion.

“Heywood Healthcare’s progress is attributed to its dedicated medical staff and employees, along with strong financial and operational prudence. We will proceed thoughtfully and planfully, maintain focus on patient care, and continue to forecast potential risks,” Rozanna Penney, Heywood Healthcare president and CEO, said in a Wednesday press release announcing the filing of the Chapter 11 exit plan. “The board and leadership team extend our gratitude for the steadfast support of our federal, state, and local representatives, as well as our appreciation for the patients who continue to choose Heywood Healthcare.”

For all the organizations Heywood owes money to, the healthcare nonprofit is asking them to accept the partial payment plan outlined in the bankruptcy exit filing or file objections by July 16, according to the filing made in U.S. Bankruptcy Court for the District of Massachusetts, Central Division.

Heywood plans to have a confirmation hearing on the bankruptcy plan on July 26, after which the organization would exit bankruptcy.

When it filed for bankruptcy, Heywood cited a lengthy and expensive electronic medical record transition, workforce challenges, and supply chain issues as reasons for its revenue shortfall. Heywood had $76.7 million in outstanding debt obligations, mostly owed to state agency MassDevelopment, according to its bankruptcy filing. The hospital system owed another $31.3 million to its top 20 creditors. Separately, Heywood and related parties have been sued for $9 million over unpaid work at the now-paused surgical pavilion project.

Heywood has two hospitals in its system: a 134-bed facility in Gardner and the 25-bed Athol Hospital. Heywood Healthcare operates Heywood Medical Group, which has an 86-bed mental health and substance abuse recovery facility in Petersham.

In the time since the initial bankruptcy filing, Heywood has improved service lines and grown operations, including a 16% increase in labor and delivery services, according to the release.

Heywood partially re-opened its Gardner-based 12-bed inpatient mental health unit in January.