More and more hospitals are in danger of going bankrupt the longer the coronavirus surge lasts. Through June of this year, 29 hospitals have declared bankruptcy. During the full 2019 calendar year, there were 30 such bankruptcies, the Washington Examiner reported. As the pandemic grew in March, hospitals saw steep revenue declines in their most profitable areas. Many states restricted the ability of hospitals to perform elective surgeries and outpatient procedures. Additionally, emergency room volumes dropped as more people did not visit the hospital for fear of COVID infection. "Hospitals were left with critical care and inpatient services, and that is the least profitable revenue for hospitals," said Nathan Kaufman, managing director of Kaufman Strategic Advisors. "That puts hospitals in a very precarious financial position … hospitals in difficult financial condition prior to COVID are now in dire straits." The hospital industry has been on rocky terrain financially for years. The Posnelli-TrBK Distress Index measures the distress in an industry based on recent chapter 11 filings in that industry. The closer the index is to zero, the healthier the industry. In the first quarter of 2020, the index for hospitals stood at 233. More than 260 hospitals furloughed employees to make ends meet between March and June. Most notably, the esteemed Mayo Clinic furloughed and reduced the hours of 30,000 employees to offset an estimated $3 billion in losses. According to the American Hospital Association, hospitals nationwide lost over $161 billion due to canceled surgeries and other services from March to June of this year. In March and April, 55 percent fewer people sought care at hospitals, while visits from the uninsured rose 114 percent, according to Strata Decision Technology. Yet hospitals are still struggling with ER volume, even in areas where the pandemic has abated. Read more.
Don't miss the "The Pros and Cons of Transactions Involving Distressed Hospitals and Health Care Providers" session at ABI's Mid-Atlantic Virtual Bankruptcy Workshop on August 6-7. Sessions offer up to 4/4.5 hours of CLE/CPE credit, including 1 hour of ethics credit, for a total price of $100. Register today.
