| The health care arena has not been immune to recent economic trends, and bankruptcies are on the rise, especially among senior care facilities. This article examines some of the trends that have led to increased filings and some of the special considerations that arise in the context of a senior care facility bankruptcy filing.
Senior Care Facilities Are Experiencing Financial Distress
The health care space has been particularly affected by the recent economic turbulence. As of June 30, 2023, senior care facility chapter 11 bankruptcy filings involving debtors with liabilities exceeding $10 million are on pace to triple 2021’s filings. Moreover, senior care filings comprised the majority (26.1%) of large health care bankruptcies from 2019 through the second quarter of 2023.
Health care analysts predict continued distress and market consolidation among senior care facilities. This increase in financial distress is driven in part by capital market constraints, regulatory compliance burdens, changes in reimbursement rates, labor shortages and supply cost pressures, macroeconomic forces such as COVID-19, and rising interest rates.
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