NEW YORK, Oct. 30, 2018 (GLOBE NEWSWIRE) -- The rise of hospitals filing for Chapter 11 bankruptcy has shapedthe U.S. economic distress in the third quarter of 2018, which is detailed in the latest Polsinelli-TrBK Distress Indices Report.
The report, which was released today by Am Law 100 firm Polsinelli, shows how health care has decoupled from the general U.S. economy. As the economy – specifically Chapter 11 bankruptcies and the real estate industry – has remained stable over the last several quarters, health care has shown consistent high levels of distress – eight of the past 11 quarters have registered a jump in the industry’s economic distress.
The Polsinelli-TrBK Distress Indices are the backbone of a quarterly research report series that uses Chapter 11 filing data as a proxy for measuring financial distress in the overall U.S. economy and breakdowns of distress specifically in the real estate and the health care services sectors.
“What is significant about our report is that it is based on a rolling four-quarter basis. It is not really a spike quarter-to-quarter, but it is measured over a year, so the bumps are more meaningful. Each quarter reflects an entire year's worth of data,” said Jeremy Johnson, a bankruptcy and restructuring attorney at Polsinelli and the editor of the report. “Because of this, the report is a proxy for actual distress, but this quarter, we believe the distress may be even more widespread because not all companies end up in bankruptcy.”
More specifically, the Indices – which are based on Chapter 11 bankruptcy filings with more than $1 million in assets – detail that more than 20 hospitals have filed bankruptcy since 2016, and 75 percent of them are in rural areas where reimbursement rates are falling and the uninsured population is growing.
The southwestern states are being hit the hardest with a significant number of rural health care facilities closing and additional Medicare expansion troubles. As an example, Houston-based Neighbors Legacy Holdings had more than 30 freestanding emergency centers throughout Texas, but increased competition, insurance payer pressure and overexpansion forced the company the file for Chapter 11 in 2018.
Looking at the Indices, it is notable that general Chapter 11 bankruptcies are down 53 percent from the benchmark in 2010; in the same period, distress in the real estate industry is down 68 percent. In contrast, health care industry distress increasedby 305 percent. Other significant updates in the report include:
The Polsinelli-TrBK Distress Indices track the increase or decrease in all Chapter 11 filings with more than $1 million in assets since the fourth quarter of 2010. Unlike the public markets, the Polsinelli-TrBK Distress Indices include both public and private companies, creating a broader economic view and one that may show developing trends on Main Street before they appear on Wall Street.
To access the full report, included graphs and all past analysis, visit https://www.distressindex.com.
Polsinelli is an Am Law 100 firm with more than 825 attorneys in 21 cities coast to coast. Ranked #24 for Client Service Excellenceand #10 for best client relationshipsamong 650 U.S. law firms, Polsinelli is also named among the top 30 best-known firms in the nationfor the second consecutive year. The firm’s attorneys provide value through practical legal counsel infused with business insight, and focus on health care, financial services, real estate, intellectual property, midmarket corporate, labor and employment, and business litigation. www.polsinelli.com.
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