Trios Health Files for Chapter 9 to Reorganize Debt

Trios Health Files for Chapter 9

Kennewick, Washington-based Trios Health has announced that it has filed for Chapter 9 bankruptcy with the U.S. Bankruptcy Court for the Eastern Division of Washington state. The filing number is 17-02025-9. Chapter 9 provides municipalities a grace period to propose a plan to reorganize debt with third parties.

Trios Health, formerly Kennewick General Hospital, operates two hospitals with 111 licensed beds and numerous outpatient care centers throughout Kennewick. The district hospital employs around 1,100 people, including a medical staff of over 300. The new state-of-the-art Trios Southridge Hospital opened in 2014.

The only public hospital district in the Tri-Cities area, Trios has reported operational losses over the past three years and has depleted its cash. The hospital had about five days’ worth of cash on hand; the target is 122 days. It currently has $221.0 million in debt. In 2016, the hospital had a net loss of about $17.0 million.

Craig Cudworth, CEO, says bankruptcy is the best option for Trios to reorganize its debts. He hopes the hospital will be out of bankruptcy in one to three years. While Cudworth says he was open to sitting down with major creditors to negotiate, the hospital was “unable to arrange for them to do that.”


The next step is to file a plan of adjustment and disclosure statement. These documents will be filed when the outline of the plan is finalized.

We have arrived to a point that we must restructure our debt so that we can sustain our operations and services to the Tri-Cities,” said Marv Kinney, president of the Kennewick Public Hospital District board of commissioners. “We have endeavored to avoid this process by working with our creditors. Unfortunately, a few are not amenable to negotiation so we needed to file so patient care can continue unhindered.”

What is important right now is that our team remains focused on moving forward and staying our course,” Cudworth added. “Over the last few months, we have significantly reduced our expenses throughout the organization and adjusted our workforce to match our patient volumes, which continue to exceed years past. It’s not too late for us to fix the financial challenges and we have every reason to be successful in doing so.”

However, Cudworth said there will be concerns with its creditors.

It’s important that our vendors and partners understand that we sought to avoid this,” he said. “We have tried to work out payment plans that would give us some room, but that was not agreeable to all. In the interest of continuing patient services, this is what we must do.”

Trios also is exploring affiliation or other partnerships with an outside health system, and it’s seeking $150.0 million in refinancing through the U.S. Department of Housing and Urban Development.


Trios Health files Chapter 9 to reorganize debt, patient services unaffected,” Trios Health, June 30, 2017.

Keswick Public Hospital District Case Administration Website,” Garden City Group LLC, last accessed July 4, 2017.