From reimbursement challenges to declining patient volumes and a turbulent economic climate many factors cause hospitals and healthcare companies to file for bankruptcy:
Below are 17 hospitals and healthcare companies that filed for bankruptcy so far this year:
1. Rite Aid is filing for Chapter 11 bankruptcy protection and named Jeffrey Stein as its CEO and chief restructuring officer, effective Oct. 15, to lead it through the turnaround. The Philadelphia-based company, which has 2,100 stores across the U.S., has secured $3.45 billion from lenders to fund operations throughout the bankruptcy process. The largest creditor is McKesson Corp. with trade-payable claims of approximately $667.6 million, according to Bloomberg. Rite Aid said it will also close "underperforming" brick-and-mortar stores. It is working with A&G Realty Partners on its store closure and lease restructuring program.
2. Gardner, Mass.-based Heywood Healthcare filed for Chapter 11 bankruptcy Oct. 2, citing a string of challenges "hindering its sustainability." The health system said workforce shortages, supply chain issues and low reimbursement rates have contributed to financial instability. It has also undergone a "costly and lengthy" electronic medical record transition while managing aging infrastructure and a "milestone construction project" — a surgical pavilion set to open in April.
3. Let's Talk Interactive, a software company specializing in telehealth, filed for Chapter 11 bankruptcy Sept. 21. The Charlotte, N.C.-based company filed a voluntary bankruptcy petition, which detailed that its secured and unsecured debt, excluding debts owed to insiders or affiliates, is less than $7.5 million. Let's Talk Interactive estimated its assets and liabilities were between $1 million and $10 million. The company was part of the AWS Public Sector Partner Program and had its telehealth solutions on Amazon Web Services' marketplace.
4. American Physician Partners, a medical staffing company based in Brentwood, Tenn., filed for Chapter 11 bankruptcy protection in September. APP announced its closure in July and transitioned its about 150 hospital and health system clients to other emergency medicine staffing firms or insourced services within the organizations by the end of that month. APP was founded in 2015 and provided emergency medicine and hospital medicine management services to more than 150 hospitals and health systems in 18 states, according to its website. The company listed assets of as much as $500 million and liabilities of as much as $1 billion in its Chapter 11 petition. It plans to liquidate under court supervision.
5. The Hospital at Westlake Medical Center, a physician-owned hospital in Westlake Hills, Texas, announced Sept. 8 it is filing for Chapter 11 bankruptcy protection. The hospital had significant debt before the COVID-19 pandemic, and the pandemic exacerbated the situation. The hospital will continue all its operations during the bankruptcy proceedings.
6. St. Margaret's Health, which has been closed since June, filed two petitions of Chapter 11 bankruptcy for its St. Margaret's Spring Valley (Ill.) and St. Margaret's Peru (Ill.) facilities. The health system reported that it had at least 1,000 creditors who are owed between $10 million and $50 million. Peoria, Ill.-based OSF Healthcare has since received approval to take over the Peru facility. Filing for bankruptcy will allow OSF to begin the purchasing process.
7. Trinity Regional Hospital Sachse (Texas) filed for bankruptcy Aug. 29. The hospital opened two years ago and since has defaulted on around $70 million of municipal bonds that were issued in 2020. Trinity Regional Hospital Sachse's owner listed assets of $50 million to $100 million and liabilities of $100 million to $500 million on the bankruptcy petition. The hospital aims to find a buyer.
8. London-based digital-first healthcare platform Babylon Health filed for Chapter 7 bankruptcy for two subsidiaries — Babylon Healthcare and Babylon Inc. — as it shuts down core U.S. operations, according to documents filed Aug. 9 in a Delaware bankruptcy court. The filing came shortly after a planned combination Babylon's core operating subsidiaries with MindMaze, digital neurotherapy company, collapsed.
9. Mercy Iowa City filed for Chapter 11 bankruptcy Aug. 7. The filing included a reference to a letter of intent between Mercy Iowa City and the state of Iowa that outlines a plan to transition the hospital to become part of UI Health Care. However, major bondholders were unhappy with the $20M valuation of the facility and sought a more competitive bidding process. Bondholder Preston Hollow Community Capital will acquire the hospital.
10. Martin General Hospital, a 49-bed facility in Williamston, N.C., suspended operations Aug. 3 and plans to file for bankruptcy. The hospital, which lost $13 million in 2022, cited financial challenges related to declining population and utilization trends as reasons for the decision.
11. Quincy, Mass.-based Compass Medical Group filed for Chapter 7 bankruptcy in June, less than one week after it abruptly closed and discontinued services to about 70,000 patients. The bankruptcy filing comes after a class-action suit was filed against Compass, which includes more than 70 providers and six clinic locations. The filing claims that Compass will have no money to pay unsecured creditors after administrative expenses are paid.
12. GenesisCare, a cancer and cardiac care provider, filed for Chapter 11 bankruptcy in June. GenesisCare has 5,500 employees and operates in several countries including Australia, the U.S. and the U.K. However, as part of its restructuring process, the company is exploring the separation of its U.S. business from its businesses in Australia, Spain and the U.K., creating two platforms.
13. Nashville, Tenn.-based Envision Healthcare, a physician staffing firm, filed for Chapter 11 bankruptcy in May. Envision entered into a restructuring support agreement with key stakeholders supported by more than 60 percent of the company's $7.7 billion in debt obligations. All of the company's debt — excluding a revolving credit facility for working capital — will be equitized or cancelled, deleveraging about $5.6 billion. The company plans to split with AmSurg and reorganize as it emerges from bankruptcy in October.
14. San Benito Health Care District, the board overseeing Hollister, Calif.-based Hazel Hawkins Memorial Hospital, voted May 22 to file for Chapter 9 bankruptcy. The hospital said it will remain open and operational "while leadership looks for a strategic partner or buyer."
15. Digital health company Pear Therapeutics filed for Chapter 11 bankruptcy and terminated 170 employees, or 92 percent of its workforce, according to an April 5 filing with the U.S. Securities and Exchange Commission. The company kept 15 employees as part of a "transition" team as it looked to sell off its assets. Pear Therapeutics developed digital prescription medicines. CEO Corey McCann was among the 170 employees laid off.
16. Montebello, Calif.-based Beverly Hospital filed for Chapter 11 bankruptcy April 19. The hospital secured $13 million in financing to keep operating as it looked for a buyer. Hospital officials said rising costs outpacing government reimbursement rates were to blame for the situation. Beverly has unsuccessfully attempted to merge with three health systems.
17. Madera (Calif.) Community Hospital filed for Chapter 11 bankruptcy March 10. The hospital officially closed at midnight Dec. 30, after Livonia, Mich.-based Trinity Health's plan to buy the hospital fell through. Trinity already owns and operates Saint Agnes Medical Center in Fresno, Calif. Madera Community leaders had hoped to avoid bankruptcy and explored a number of options, including looking for another organization to take over operations. But without a buyer lined up, the hospital proceeded with the bankruptcy filing.