Skip to main content
Sister Publication Links
  • ESG: THE IMPLEMENTATION IMPERATIVE
Subscribe
  • Sign Up Free
  • Login
  • Subscribe
  • News
    • Current News
    • Providers
    • Insurance
    • Digital Health
    • Government
    • Finance
    • Technology
    • Safety & Quality
    • Transformation
    • People
    • Regional News
    • Digital Edition (Web Version)
    • Patients
    • Operations
    • Care Delivery
    • Payment
    • Midwest
    • Northeast
    • South
    • West
  • Unwell in America
  • Opinion
    • Bold Moves
    • Breaking Bias
    • Commentaries
    • Letters
    • Vital Signs Blog
    • From the Editor
  • Events & Awards
    • Awards
    • Conferences
    • Galas
    • Virtual Briefings
    • Webinars
    • Nominate/Eligibility
    • 100 Most Influential People
    • 50 Most Influential Clinical Executives
    • Best Places to Work in Healthcare
    • Excellence in Governance
    • Health Care Hall of Fame
    • Healthcare Marketing Impact Awards
    • Top 25 Emerging Leaders
    • Top 25 Innovators
    • Diversity in Healthcare
      • - Luminaries
      • - Top 25 Diversity Leaders
      • - Leaders to Watch
    • Women in Healthcare
      • - Luminaries
      • - Top 25 Women Leaders
      • - Women to Watch
    • Digital Health Transformation Summit
    • ESG: The Implementation Imperative Summit
    • Leadership Symposium
    • Social Determinants of Health Symposium
    • Women Leaders in Healthcare Conference
    • Best Places to Work Awards Gala
    • Health Care Hall of Fame Gala
    • Top 25 Diversity Leaders Gala
    • Top 25 Women Leaders Gala
    • - Hospital of the Future
    • - Value Based Care
    • - Hospital at Home
    • - Workplace of the Future
    • - Digital Health
    • - Future of Staffing
    • - Hospital of the Future (Fall)
  • Multimedia
    • Podcast - Beyond the Byline
    • Sponsored Podcast - Healthcare Insider
    • Video Series - The Check Up
    • Sponsored Video Series - One on One
  • Data Center
    • Data Center Home
    • Hospital Financials
    • Staffing & Compensation
    • Quality & Safety
    • Mergers & Acquisitions
    • Data Archive
    • Resource Guide: By the Numbers
    • Surveys
    • Data Points
  • MORE+
    • Contact Us
    • Advertise
    • Media Kit
    • Newsletters
    • Jobs
    • People on the Move
    • Reprints & Licensing
MENU
Breadcrumb
  1. Home
  2. Finance
February 14, 2020 03:26 PM

Healthcare bankruptcies down from last year's high, but don't expect full rebound

Tara Bannow
  • Tweet
  • Share
  • Share
  • Email
  • More
    Reprints Print
    Modern Healthcare Illustration / Getty Images

    Healthcare provider bankruptcies, while down from their peak a year ago, still far outpace overall bankruptcies, according to a new report from the law firm Polsinelli.

    Overall Chapter 11 bankruptcy filings dropped 50% in the fourth quarter of 2019 compared with the same period in 2010. Healthcare bankruptcies, by contrast, increased 125% in that time, according to the report, which tracks all Chapter 11 filings with assets over $1 million.

    But there may be some good news for healthcare providers. Polsinelli's healthcare distress research index declined more than 225 points in the fourth quarter of 2019 year-over-year. The distress index measures bankruptcy filings on a trailing, four-quarter basis to smooth out volatility and provide a better picture of long-term trends.

    But don't expect that to continue, said Jeremy Johnson, the lead author of the report.

    Healthcare, which includes hospitals and senior living facilities in this report, saw the highest distress index last year since Polsinelli started measuring, he said. Even though it's coming back down, healthcare still outpaces other sectors.

    "I don't think the stress is going away in healthcare," Johnson said, adding that as a bankruptcy lawyer, healthcare comprises about 95% of his work.

    The healthcare distress index also dropped 156 points from last quarter, although the sector has experienced eight straight quarters of high distress, which is determined to be at least 100 points, the report said.

    Johnson said one big factor that tends to pull providers into bankruptcy is overexpansion: getting too big, too fast. That's what happened in the case of the fourth quarter's largest healthcare bankruptcy filing. Three-hospital system Astria Health filed bankruptcy after buying two hospitals from Community Health Systems in Washington state. In that case, Astria argued the regulatory delay involving the acquired hospitals and the cost of electronic billing and records ultimately led to the bankrupt.

    "In healthcare it seems like there is a such a low margin of error that folks acquire one or two bad hospitals and it brings down your whole system," Johnson said.

    In some cases, Johnson said there's not much the hospital operators can do to turn things around if they're located in a market with a high proportion of uninsured patients and patients relying on Medicaid and Medicare. One example of that, he said, is the recent bankruptcy of Thomas Health System in West Virginia.

    "There's no potential solution for that situation," he said. "You can't change the demographics, you can't change payer system, the rate of uninsured. It's West Virginia. It's not as if you can attract more people."

    Healthcare distress in the fourth quarter was driven primarily by bankruptcy filings in Washington, Texas and New York, the report said. Polsinelli's report found 35% of healthcare bankruptcy filings took place in the southeastern U.S. in the fourth quarter of 2019, compared with 19% in the Northwest. Since the fourth quarter of 2010, healthcare bankruptcies in the Midwest have declined nearly 11%, and increased by 12% in the Northwest.

    Letter
    to the
    Editor

    Send us a letter

    Have an opinion about this story? Click here to submit a Letter to the Editor, and we may publish it in print.

    Recommended for You
    money arrows decrease down 2.png
    Texas declares Friday Health Plans insolvent, seizes assets
    stephanie-rhee-Klrz1qOKPAc-unsplash.jpg
    Walgreens bets big on VillageMD as it expands healthcare services
    Most Popular
    1
    More healthcare organizations at risk of credit default, Moody's says
    2
    Centene fills out senior executive team with new president, COO
    3
    SCAN, CareOregon plan to merge into the HealthRight Group
    4
    Blue Cross Blue Shield of Michigan unveils big push that lets physicians take on risk, reap rewards
    5
    Bright Health weighs reverse stock split as delisting looms
    Sponsored Content
    Daily Finance Newsletter: Sign up to receive daily news and data that has a direct impact on the business and financing of healthcare.
    Get Newsletters

    Sign up for enewsletters and alerts to receive breaking news and in-depth coverage of healthcare events and trends, as they happen, right to your inbox.

    Subscribe Today
    MH Magazine Cover

    MH magazine offers content that sheds light on healthcare leaders’ complex choices and touch points—from strategy, governance, leadership development and finance to operations, clinical care, and marketing.

    Subscribe
    Connect with Us
    • LinkedIn
    • Twitter
    • Facebook
    • RSS

    Our Mission

    Modern Healthcare empowers industry leaders to succeed by providing unbiased reporting of the news, insights, analysis and data.

    Contact Us

    (877) 812-1581

    Email us

     

    Resources
    • Contact Us
    • Advertise with Us
    • Ad Choices Ad Choices
    • Sitemap
    Editorial Dept
    • Submission Guidelines
    • Code of Ethics
    • Awards
    • About Us
    Legal
    • Terms and Conditions
    • Privacy Policy
    • Privacy Request
    Modern Healthcare
    Copyright © 1996-2023. Crain Communications, Inc. All Rights Reserved.
    • News
      • Current News
      • Providers
      • Insurance
      • Digital Health
      • Government
      • Finance
      • Technology
      • Safety & Quality
      • Transformation
        • Patients
        • Operations
        • Care Delivery
        • Payment
      • People
      • Regional News
        • Midwest
        • Northeast
        • South
        • West
      • Digital Edition (Web Version)
    • Unwell in America
    • Opinion
      • Bold Moves
      • Breaking Bias
      • Commentaries
      • Letters
      • Vital Signs Blog
      • From the Editor
    • Events & Awards
      • Awards
        • Nominate/Eligibility
        • 100 Most Influential People
        • 50 Most Influential Clinical Executives
        • Best Places to Work in Healthcare
        • Excellence in Governance
        • Health Care Hall of Fame
        • Healthcare Marketing Impact Awards
        • Top 25 Emerging Leaders
        • Top 25 Innovators
        • Diversity in Healthcare
          • - Luminaries
          • - Top 25 Diversity Leaders
          • - Leaders to Watch
        • Women in Healthcare
          • - Luminaries
          • - Top 25 Women Leaders
          • - Women to Watch
      • Conferences
        • Digital Health Transformation Summit
        • ESG: The Implementation Imperative Summit
        • Leadership Symposium
        • Social Determinants of Health Symposium
        • Women Leaders in Healthcare Conference
      • Galas
        • Best Places to Work Awards Gala
        • Health Care Hall of Fame Gala
        • Top 25 Diversity Leaders Gala
        • Top 25 Women Leaders Gala
      • Virtual Briefings
        • - Hospital of the Future
        • - Value Based Care
        • - Hospital at Home
        • - Workplace of the Future
        • - Digital Health
        • - Future of Staffing
        • - Hospital of the Future (Fall)
      • Webinars
    • Multimedia
      • Podcast - Beyond the Byline
      • Sponsored Podcast - Healthcare Insider
      • Video Series - The Check Up
      • Sponsored Video Series - One on One
    • Data Center
      • Data Center Home
      • Hospital Financials
      • Staffing & Compensation
      • Quality & Safety
      • Mergers & Acquisitions
      • Data Archive
      • Resource Guide: By the Numbers
      • Surveys
      • Data Points
    • MORE+
      • Contact Us
      • Advertise
      • Media Kit
      • Newsletters
      • Jobs
      • People on the Move
      • Reprints & Licensing