While the healthcare industry has historically been resistant to financial crises, the impact of the current economic recession has critical implications for all involved in the healthcare industry, including hospitals, clinics, nonprofits, physicians, and patients.  With the economic downturn comes a shift in patient mentality as patients forgo or delay elective procedures.  With unemployment rates high, individuals also face challenges with a lack of employment-based insurance coverage, and recent statistics indicate that COBRA coverage is being underutilized by the unemployed.  The physician workforce is another area that will likely be significantly impacted as older physicians delay retirement and would-be young doctors face issues in securing medical school 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 inadequate capital structure.  Financial difficulties are exacerbated in the healthcare industry due to its unique billing and collection practices commonly referred to as “revenue-cycle management,” whereby a third-party payor, 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.

In this current economic climate, 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.  The attorneys of DelCotto Law Group have experience in restructuring healthcare businesses, both in out-of-court restructurings and Chapter 11 bankruptcy proceedings.  Specifically, the attorneys of DelCotto Law Group can assist a healthcare 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 Assets