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.
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.
The second-quarter filings came from a mix of small hospitals and long-term care providers, Johnson said.
This quarter, “we are seeing additional senior living distress — two separate filings this week alone,” Johnson said.
One hospital company that filed for bankruptcy court protection in the second quarter, Magee, Mississippi-based Pioneer Health Services, said it ran into problems partly because insurers have been slower to make reimbursement payments, and partly because it tends to get less total reimbursement when its hospitals treat patients with high-deductible health coverage.
Progressive Acute Care of Mandeville, Louisiana, a company that filed for Chapter 11 protection for three hospitals, said it has been struggling because Louisiana has only just started to use Affordable Care Act Medicaid expansion funding to expand its Medicaid program.
Have you followed us on Facebook?