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August 18, 2016 at 12:55 PM
Efforts to limit spending on acute health care and long-term care services may be starting to put some providers out of business.
The team that produces the Polsinelli-TrBK financial distress report says its health care services sector distress index jumped to 166 in the second quarter. That was up from 113 in the second quarter of 2015, and it was much higher than any other stress index figure the team has recorded. The team set the baseline level at 100 when it created the index in late 2010.
Analysts at TrollerBk.com, a San Antonio, Texas-based bankruptcy information service, use Chapter 11 bankruptcy reorganization filing data to prepare the index for Polsinelli P.C., a Kansas City, Missouri-based law firm. When the index goes up, that means the Chapter 11 filing activity for the health care services sector has increased.
A general Polsinelli-TrBK Chapter 11 distress index for the entire U.S. economy stood at 53 in the second quarter, up from 38 in the second quarter. That’s down from a baseline of 100 in 2010, as the country was emerging from the Great Recession.
The general Chapter 11 distress index fell from 2010 through 2013 and has usually changed gradually from quarter to quarter since then.
The health care services index has been rising and falling sharply, with the size of the peaks and valleys increasing over time.
The index team creates the health care services index using Chapter 11 filings for organizations with assets over $1 million that check the “health care services business box” on the Chapter 11 filing form. The bankruptcy courts’ definition of “health care services business” includes organizations such as hospitals, clinics, nursing homes and assisted living facilities.
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Jeremey Johnson, a corporate restructuring specialist at Polsinelli, said in an email interview that hospice organizations and small hospitals accounted for many of the health care services Chapter 11 filings in the first quarter.
