The number of bankruptcies in the healthcare industries have shown a decline thus far in 2024 following a five-year record high during 2023 and 2024 is on track to see 58 filings by healthcare companies with at least $10 million in liabilities, compared with 79 cases in 2023, according to healthcare restructuring advisory firm Gibbins Advisors.
Per the report:
- Clinics & Medical Equipment: Filings from clinics and physician practices have surged, trending 60% higher in 2024 based on cases filed through June 30. Medical equipment bankruptcies have shown a steady upward trajectory since 2021.
- Hospitals: Notably, only one hospital company, Steward Health Care, filed for bankruptcy in the first half of 2024, with 31 hospitals under the company’s umbrella.
“The trend of lower bankruptcy volumes is not resonating with the amount of financial distress we are seeing in our practice” said Clare Moylan, Principal at Gibbins Advisors. “A possible reason could be financial restructuring taking place out of court rather than in bankruptcy. We wouldn’t be surprised if the case volumes increased from current levels as the year progresses.”
“The very large bankruptcy cases with liabilities over $500 million include sizeable healthcare enterprises, so when you see six such cases filed year to date, that represents a much bigger number of healthcare facilities” said Ronald Winters, Principal at Gibbins Advisors. “We are seeing elevated financial distress in nursing homes, senior living, pharmacy, physician practices and rural and standalone hospitals…strained by legacy debts, cash shortages and profitability challenges.”
The decline doesn’t necessarily mean that the financial impacts that caused the bankruptcies have lessened, per the report. However, restructuring could be taking place outside of the courts and there is a potential that the number of bankruptcy cases could increase throughout the rest of 2024.
2023 was a bleak year as the healthcare industry saw more than three times the number of filings than levels that were reported back in 2021.
