Is PA Really Recession-Proof? II

It looks like health care businesses could be in for a rough time. The international law firm of White & Case sent out an e-mail today about looming hospital bankruptcies.

Hospitals in the US are suffering along with the national economy. Those that depend on alternative funding and philanthropic contributions to help finance their operations, or that are facing rising debts due to issues with uninsured patients, are at particular risk, with some facing possible bankruptcy. White & Case partner Sam Alberts anticipates the financial health of many hospitals to likely deteriorate further.

"US hospitals are feeling the pain of our current economic downturn," said Alberts. "The list of challenges is long and complex, and with no regulatory relief in sight, bankruptcy will become a reality for some of them."

The Wall Street Journal also had an article on the topic today.

More than half of U.S. hospitals aren't seeing enough patients to provide sufficient revenue to fund operations and are "teetering on the brink of insolvency" or already are insolvent, according to a study.

Restructuring firm Alvarez & Marsal said more than 2,000 of the nearly 3,900 acute-care hospitals the firm studied don't make a profit treating patients. Nearly 750 hospitals that do turn a profit still don't have enough to reinvest in improvements or other essential expenditures, the firm's study found.

While many hospitals continue to operate despite insolvency, an increasing number are filing for bankruptcy as part of a trend experts said is sure to continue.

"We're seeing hospital insolvencies and hospital bankruptcies -- it's the heyday right now," said George D. Pillari, a managing director in Alvarez & Marsal's health-care group who worked on the study. "We're going to see continued insolvencies; we're going to see more bankruptcies this year than last year."

Link