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The Health Care Industry And Economic Uncertainty

While the health care industry has historically been resistant to financial crises, the impact of economic uncertainties has critical implications for all involved in the health care industry. This includes hospitals, clinics, nonprofits, physicians and patients. With an unpredictable economy comes a shift in patient mentality as patients forgo or delay elective procedures.

Individuals also face challenges with a lack of employment-based insurance coverage. Statistics indicate that COBRA coverage is underutilized as well. The physician workforce is another area that will be significantly impacted as older physicians delay retirement and would-be young doctors face issues with medical school student loans.

One of the most obvious challenges to hospitals and clinics is the difficulty in obtaining credit and increasing borrowing costs. As a result, many hospitals and clinics continue to suffer from an inadequate capital structure.  Financial difficulties are exacerbated in the health care industry due to its unique billing and collection practices. These are commonly referred to as “revenue cycle management,” whereby a third-party payer, such as an insurance company, Medicare or Medicaid, is typically the responsible billing party.  Against this background, many hospitals and clinics are facing critical revenue and overhead issues.

Chapter 11 bankruptcy can be a vital tool to restructure existing indebtedness for a hospital or clinic or provide a mechanism for an orderly sale of assets or wind-down of operations.

DelCotto Law Group PLLC has experience in restructuring health care businesses, both in out-of-court restructurings and Chapter 11 bankruptcy proceedings. Specifically, we can assist a health care business in analyzing and addressing key bankruptcy issues including, but not limited to:

  • Patient care ombudsman
  • Regulatory issues
  • Medicare/Medicaid setoff
  • Lease assumption, rejection or assignment
  • True lease/finance lease
  • Administrative claims
  • Sale of corporate asset

For further reading please visit our blogs:
The Fiscal Health of Healthcare Providers

Rural Hospital Challenges: Is Chapter 11 a Quick Fix

We are a debt relief agency. We help people file for bankruptcy relief under the Bankruptcy Code.