Renewing Interfaith

As part of the terms of its bankruptcy, Interfaith Medical Center, one of several hospitals in Brooklyn suffering from major financial problems, has been extended a temporary stay of execution in the form of a tentative restructuring of its leadership.

Under the restructuring, which essentially sets up a transition process before a long-term plan for Interfaith is reached, Melanie Cyganowski, a former chief bankruptcy judge and a partner with the firm Otterbourg P.C.'s creditors rights and insolvency group, would take over as the hospital's chief restructuring officer. Steve Korf, the founder of ToneyKorf, a business advisory firm, and a former chief operating officer of Brookdale Hospital and chief financial officer of Long Island College Hospital in Brooklyn, would be named interim chief executive officer, according to documents filed in U.S Bankruptcy Court of the Eastern District of New York on March 21st. 

Cyganowski and Korf's appointments are effective upon approval by the hospital's creditors and community stakeholders, and once the full Chapter 11 bankruptcy plan is approved—sources say that date will likely be May 12^th—Interfaith's current board of directors would be dissolved and the state Department of Health would name Cyganowski the temporary operator of the hospital.

Attempts to reach Korf for comment were unsuccessful and Cyganowski did not immediately respond to a request for comment.

The restructuring plan puts funding in place for Interfaith to continue operations, preserve jobs at the hospital that would otherwise be lost, and pay off its creditors.

A source familiar with the restructuring format indicated that a proposal to transfer Interfaith's various free standing clinics to Kingsbrook Jewish Medical Center is currently off the table, but not completely dead. The clinics will largely operate as they have, with various improvements and restructuring to make them more financially viable over the next year. The future of the clinics will become clearer when a long-term plan to keep Interfaith operational is agreed upon by the state, community, and various stakeholders.

Sharonnie Perry, who chairs the Interfaith Community Advisory Board, is not pleased with the restructuring plan put forth, noting that the community stakeholders were not consulted about the selection of Cyganowski and Korf for the interim leadership of the hospital. 

"The community had been trying to meet with the governor and try to work something out with [the Department of Health] and [the Dormitory Authority of the State of New York] as far as making referrals, recommendations for people who could be the temporary operators and things like that," Perry said. "The state has totally ignored us." 

The community's desire for a share of the state's recently awarded $8 billion Medicaid waiver to help secure Interfaith's long-term future has been well-documented, but how that pot of money will be distributed has yet to be determined, and the application process for those funds not even begun yet.

New York City Public Advocate Letitia James, who previously floated the idea of having the current Interfaith board of directors replaced with union members and community advocates who would then submit an application for the Medicaid waiver, did not immediately respond to a request for comment. 

There will be a hearing on April 9th to approve Interfaith's disclosure statement for their bankruptcy plan—a document to give the hospital's creditors and the community information on the plan. The creditors can then vote on whether to accept or reject the plan, and the community can decide whether it wants to object to the proposed restructuting.