John Fitzgibbon Memorial Hospital - Chapter 11 Case Summary

Business Description

Located in Marshall, Missouri, John Fitzgibbon Memorial Hospital, Inc. (the "Hospital") and Fitzgibbon Health Services ("Fitzgibbon Services" and collectively, the "Debtors") operate as a private, not-for-profit rural healthcare system serving Marshall, Missouri and the surrounding rural communities.

• The Hospital operates a 60-bed acute care facility, outpatient clinics, and off-campus provider-based rural health clinics, while Fitzgibbon Services operates a 99-bed, Medicare and Medicaid certified skilled nursing facility known as The Living Center ("TLC").
• Like most rural providers, the Debtors rely heavily on Medicare and Medicaid reimbursement, serving a population with higher rates of chronic illness and lower rates of commercial insurance coverage.

The Debtors have operated at a significant loss over the last several years, including losing over $36 million since 2018. As of the Petition Date, the Debtors reported total liabilities of approximately $21.7 million, comprising approximately $10.2 million in secured indebtedness and approximately $11.5 million in unsecured indebtedness.

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Corporate History

John Fitzgibbon, an Irish immigrant who settled in Saline County, Missouri in the 1800s, identified the need for a hospital in Marshall, Missouri. Upon his death in 1916, Mr. Fitzgibbon specified in his will that a board of trustees be named to oversee the construction of a hospital, which was to operate as a private, not-for-profit corporation.

• Mr. Fitzgibbon's estate funded the construction of the original hospital. A groundbreaking ceremony took place in March 1922, and the first patient was admitted approximately one year later, in April 1923.
• As patient volumes increased in the 1950s, the hospital expanded to 90 beds to alleviate overcrowding.

Relocation and Modern Expansion

• In 1987, as healthcare needs continued to evolve, the board of trustees determined that expanded services and physician recruitment required a new facility. They selected a roughly 73-acre site west of Highway 65, across from the Saline County Fairgrounds. The Acute Care Facility opened in July 1991.
• An expansion project, comprising 28,000 square feet of new space and 13,000 square feet of redesigned and remodeled areas, opened in the winter of 2007. The Cancer Center was subsequently added after 2007.

Leadership

• Angela Littrell joined the Debtors in 2014 and was selected to serve as Chief Executive Officer in February 2020.

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Operations Overview

The Debtors' operations are centered on a multi-building campus in Marshall, Missouri, supplemented by two off-campus provider-based rural health clinics.

Acute Care Facility

• The Acute Care Facility occupies a 106,000 square foot building with 60 beds on the north side of the Hospital's campus. Departments include surgery, obstetrics, outpatient and emergency services, imaging, pharmacy, dietary with a public cafeteria, physical therapy, respiratory therapy, lab services, and a cancer center.
  • The 2007 expansion features a new imaging center and houses outpatient clinics for specialties such as orthopedics, pain management, and wound care.

The Living Center

• TLC is a 99-bed, Medicare and Medicaid certified skilled nursing facility operated by Fitzgibbon Services, offering private and semi-private rooms with skilled nursing and memory care services.
  • TLC is connected to the Acute Care Facility through a hallway, providing an easy transition from a hospital stay to post-acute care with around-the-clock access to the Acute Care Facility's resources.
  • Amenities include a nourishment station, activities and recreational programs, weekly worship services, and outdoor areas with a water garden, goldfish ponds, and a gazebo. Most support services are provided by the Hospital.

Additional Campus Facilities

• The Buckner Wellness Center ("BWC") houses cardiac rehabilitation services on the main level and provides rentable office and clinic space in the basement, which is presently unoccupied.
• MOB1 houses two provider-based rural health clinics—Missouri Valley Physicians (internal medicine) and Mid-Missouri Family Health (primary care)—offering community-based family health care including employment drug screens, DOT physicals, well-woman exams, chronic condition management, and acute care. MOB1 also provides space for visiting specialty physicians through a time-share lease.
• MOB2 leases space to a private physician practice and a private practice dentist.

Off-Campus Clinics

• The Pilot Grove Medical Clinic at Fitzgibbon, located in Pilot Grove, Missouri, is a provider-based rural health clinic offering community-based family health care, including well-child physicals, employment drug screens, well-woman exams, nursing home services, and chronic condition management. The clinic collects laboratory specimens sent to the Hospital for processing.
• The Akeman-McBurney Medical Clinic in Slater, Missouri, is similarly a provider-based rural health clinic offering comparable services. The clinic has x-ray capability and collects lab specimens sent to the Hospital for processing.
• The Hospital leases space for both the Pilot Grove and Akeman-McBurney clinics.

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Prepetition Obligations

As of the Petition Date, the Debtors' capital structure includes liabilities totaling approximately $21.7 million, comprising approximately $10.2 million in secured indebtedness and approximately $11.5 million in unsecured indebtedness.

Series 2010 Bonds

• The Debtors and the Master Trustee executed a Master Trust Indenture dated December 1, 1998 to facilitate certain borrowing by the Debtors pursuant to the Master Notes (as defined therein).
• The Hospital borrowed $12,400,000 from the Industrial Development Authority of the County of Saline, Missouri (the "Authority") through the issuance of Health Facilities Revenue Bonds (the "Series 2010 Bonds") pursuant to a Loan Agreement dated November 1, 2010.
  • The Series 2010 Bonds were issued under a Bond Trust Indenture between the Authority and BNY Trust Company of Missouri (the "Master Trustee"), which provides for the pledge and assignment of certain revenues and funds for the benefit of bondholders.
  • Obligations under the 2010 Loan Agreement and related Master Notes are secured by Deeds of Trust, Mortgage and Security Agreements dated December 1, 1998, encumbering specific real and personal property of both the Hospital and Fitzgibbon Services.
  • As of the Petition Date, the aggregate principal balance outstanding on the Series 2010 Bonds is approximately $3.8 million, maturing December 1, 2028.

Series 2016 Bonds

• The Hospital borrowed $7,550,000 from the Authority through the issuance of Health Facilities Revenue Bonds (the "Series 2016 Bonds") pursuant to a Loan Agreement dated March 1, 2016.
  • The Series 2016 Bonds were issued under a Bond Trust Indenture dated March 1, 2016 between the Authority and the Master Trustee, which provides for the pledge and assignment of certain revenues and funds for the benefit of bondholders.
  • Obligations are secured by the same Deeds of Trust encumbering specific real and personal property of both the Hospital and Fitzgibbon Services.
  • As of the Petition Date, the aggregate principal balance outstanding on the Series 2016 Bonds is approximately $4.76 million, maturing December 1, 2035.

Community Bank of Marshall

• The Hospital executed a promissory note dated September 30, 2023, in the original principal amount of $1,322,807.20 in favor of Community Bank of Marshall.
  • The note is secured by a Deed of Trust dated September 30, 2016, granting Community Bank of Marshall a lien on certain real property known as MOB1.
  • As of the Petition Date, the aggregate principal balance outstanding is approximately $1.1 million, maturing September 30, 2026.

Wood & Huston Bank

• The Hospital executed a promissory note dated May 10, 2024, in the original principal amount of $270,810.80 in favor of Wood & Huston Bank.
  • The note is secured by a certificate of deposit with a face amount of $271,689.94.
  • As of the Petition Date, the aggregate principal balance outstanding is approximately $270,000, maturing February 11, 2027.

AmerisourceBergen

• The Hospital purchases certain pharmaceuticals from AmerisourceBergen Drug Corporation on revolving credit of up to $250,000, secured by a UCC-1 filing dated May 24, 2013. As of the Petition Date, the aggregate amount owed to AmerisourceBergen is approximately $250,000.

Unsecured Debt

• As of the Petition Date, the Debtors have approximately $11.5 million in accounts payable, including disputed, unliquidated, or contingent claims, generally comprising trade creditors that provided goods and services for patient care and operations.

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Events Leading to Bankruptcy

Structural Headwinds Facing Rural Healthcare Providers

The Debtors' filing did not arise from a single event but rather from a sustained and accelerating deterioration in the operating environment for rural healthcare providers across the United States. Even before the pandemic, the Debtors operated in a structurally disadvantaged environment characterized by a fundamental economic mismatch: the obligation to maintain round-the-clock facilities, staffing, and emergency capabilities while serving smaller, lower-income populations that generate insufficient reimbursement to cover those costs.

• The Debtors rely heavily on Medicare and Medicaid reimbursement, which can pay less than the cost of delivering care, while serving communities with higher rates of chronic illness and lower rates of commercial insurance coverage.
• The Debtors have also struggled to recruit and retain physicians, nurses, and specialized staff, increasingly relying on higher-cost contract labor and premium compensation arrangements that further eroded already thin margins.

Impact of COVID-19

The COVID-19 pandemic significantly exacerbated the Debtors' challenges. The Debtors were forced to suspend or significantly curtail elective procedures—the very services that typically generate positive margins and subsidize essential but unprofitable care—while demand for emergency and critical care services increased and operating costs surged.

• Labor costs escalated due to staffing shortages and reliance on temporary personnel, and the Debtors incurred additional expenses for protective equipment, expanded capacity, and new protocols.
• Although federal relief programs provided temporary support, those funds were not designed to solve the underlying structural challenges facing rural providers. As those funds were exhausted, the Debtors were left with a weakened balance sheet, depleted liquidity, and ongoing operating losses.
  • The Debtors still have approximately $2.4 million in COVID relief funds due from the Federal Emergency Management Agency and approximately $3.0 million (plus accrued interest) in CARES Act Employee Retention Credits submitted to the Internal Revenue Service.

Absence of Post-Pandemic Recovery and Service Eliminations

Unlike some larger health systems, the Debtors have not experienced a meaningful post-pandemic recovery. Costs have remained elevated, particularly labor and supply expenses, and workforce shortages persist, limiting the Debtors' ability to expand or maintain certain service lines.

• The Debtors have been forced to eliminate certain services, including the intensive care unit, in-patient behavioral health unit, home health and hospice services, two primary care rural health clinics, and the chiropractic clinic, along with miscellaneous staffing reductions including the elimination of two C-suite positions.
• Patient volumes and payer mix have not improved sufficiently to restore financial stability, with the Debtors continuing to serve a population that is older, sicker, and more dependent on government reimbursement programs, resulting in ongoing liquidity pressure and insufficient cash flow to meet both operational needs and debt service obligations.

Legislative and Payer Mix Headwinds

• Recent federal legislation, including the "One Big Beautiful Bill Act" ("OBBBA"), is expected to reduce Medicaid funding and increase the number of uninsured individuals, compounding the Debtors' financial pressures through both reduced reimbursement and increased uncompensated care. While the legislation includes certain rural health funding measures, those programs appear temporary and limited in scope.
• A shift in payer mix from traditional Medicare to Medicare Advantage Plans has further strained liquidity. Traditional Medicare typically pays claims within 14 days, whereas Medicare Advantage Plans typically pay within 45 to 90 days and impose prior authorization requirements, higher denial rates, and more onerous credentialing requirements.

Cumulative Losses and Prepetition Marketing Efforts

As a result of the foregoing headwinds, the Debtors have operated at a significant loss over the last several years, losing over $36 million since 2018.

• In 2024, the Hospital engaged Juniper Advisory, LLC ("Juniper") to run a sale and marketing process to identify a strategic or financial partner. That process did not yield an acceptable option to the Debtors' board of trustees.
• On December 1, 2025, the Debtors missed principal and interest payments on the Series 2010 Bonds and Series 2016 Bonds. On December 23, 2025, the Master Trustee served notices of default.
• In 2025 and early 2026, the Debtors explored options to work through their financial and operational challenges as they sought to right-size their balance sheet.

Chapter 11 Filing and Sale Process

The Debtors re-engaged Juniper on January 22, 2026, to market and sell substantially all of the Debtors' assets, with a focus on the Acute Care Facility. On February 18, 2026, the Debtors engaged Healthcare Transactions Group, Inc. to market and sell TLC.

• The Debtors commenced their Chapter 11 cases on April 21, 2026, in the U.S. Bankruptcy Court for the Western District of Missouri.
• The Debtors' prepetition sale and marketing process is summarized in the contemporaneously filed Motion for Entry of Order Authorizing Sale of Substantially All Assets Free and Clear of All Liens, Interests, Claims, and Encumbrances.
• To fund operations during the Chapter 11 cases, the Debtors are seeking court-approved access to Cash Collateral.