Bankruptcy: attractive option under new Bankruptcy Reform Act for debtor.
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Illness and injury as contributors to bankruptcy.
In 2001, 1.458 million American families filed for bankruptcy. To investigate medical contributors to bankruptcy, we surveyed 1,771 personal bankruptcy filers in five federal courts and subsequently completed in-depth interviews with 931 of them. About half cited medical causes, which indicates that 1.9-2.2 million Americans (filers plus dependents) experienced medical bankruptcy. Among those whose illnesses led to bankruptcy, out-of-pocket costs averaged dollar 11,854 since the start of illness; 75.7 percent had insurance at the onset of illness. Medical debtors were 42 percent more likely than other debtors to experience lapses in coverage. Even middle-class insured families often fall prey to financial catastrophe when sick.
Bankruptcy↗
Hospital bankruptcies: an exploration of potential causes and consequences.
Although small in number, hospitals are increasingly seeking bankruptcy protection. This article explores the potential forces that might motivate hospitals to seek bankruptcy protection and the potential consequences for hospitals that obtain it. Case reviews of 11 hospital bankruptcies that occurred in 1990 and 1991 are presented. The findings should assist hospital executives, trustees, financial analysts, and legal counsel as they assess bankruptcy as an option for distressed hospitals.
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Section 525(a) of the bankruptcy code plainly does not apply to Medicare provider agreements.
Section 525(a) of the Bankruptcy Code prevents government entities from discriminating against debtors based on the debtor's bankruptcy filing. This Article analyzes how this provision is applied to healthcare providers who file for bankruptcy. Some commentators have expressed concerns that because of Section 525, the federal government is unable to deny a bankrupt provider a new Medicare provider agreement due to the debtor's failure to pay debts discharged during bankruptcy. This Article, however, argues that Section 525 does not apply to a provider agreements because it is not a "license, permit, charter, franchise, or other similar grant" as defined by the statute. Therefore, the author concludes that debtor healthcare providers should not be allowed back into the Medicare program without first paying their statutorily required debts.
Accounts Payable and Receivable↗
Filing for bankruptcy: a sign of failure or hope for the hospital?
Hospitals that file for bankruptcy are usually viewed as admitting failure or defeat. However, bankruptcy can become a constructive financial management tool if used appropriately. Under Chapter 11 of the Bankruptcy Code, hospital management can use bankruptcy to reorganize the failing financial situation of the hospital into one that is financially stable and able to continue operations indefinitely.
Accounts Payable and Receivable↗
Chain reaction: an exploratory study of nursing home bankruptcy in California.
This paper reports on an exploratory study of nursing home bankruptcy. From state and industry data regarding nearly 1,000 California facilities, it was possible to identify 155 homes in five chains (multi-facility organizations) that were operating in bankruptcy in 2000. When compared with facilities in non-bankrupt chains, while the bankrupt chain facilities had significantly worse financial liquidity, higher administrative costs, and higher payables to related parties, they also had more Medicare residents, fewer Medicaid residents, better solvency, and were located in less competitive county markets and in areas with higher Medicaid reimbursement rates. These findings indicate that, rather than facility characteristics and local market factors, strategic decisions taken at the corporate (chain) level are the major determinants of nursing facility bankruptcy status.
Aged↗
Discounting the debtors will not make medical bankruptcy disappear.
David Dranove and Michael Millenson seem determined to deny that financial fallout from illness pushes middle-class families into bankruptcy. Anxious to erase the headline that three-quarters of U.S. medical bankrupts had health insurance at the onset of their illnesses and the resulting spotlight on inadequate coverage and insurance cancellation practices, they ignore most of our data and misrepresent the rest. They dismiss families' explanations of their difficulties and blame those ruined by illness for their own problems. However, the data from the bankruptcy courts are undeniable. Bankruptcies affect mainly middle-class, privately insured families, and about half are triggered, at least in part, by illnesses.
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Control during corporate crisis: asbestos and the Manville bankruptcy.
Chapter 11 bankruptcy provides an opportunity for addressing issues of power and control during corporate crisis. A broad notion of power is essential in understanding the complex events that led to the Chapter 11 filing of the Manville Corporation, formerly the nation's leading asbestos manufacturer. The theory of finance hegemony places this case in an entirely new light by taking into account the power of the financial community. The Manville bankruptcy illuminates several mechanisms by which this hegemony operates. From this perspective, Chapter 11 bankruptcy is viewed as a choice made from a set of options severely constrained by other powerful institutions, rather than a result of managerial incompetence or market failure.
Asbestos↗
The hospital bond market and the AHERF bankruptcy.
An analysis of hospital, tax-exempt bonds issued before and after the Allegheny Health, Education, and Research Foundation (AHERF) bankruptcy demonstrated that despite the decline in market rates for tax-exempt securities in the post period, bonds issued by hospitals and systems carried higher coupon rates than they did in the pre period. There was a significant decline in the proportion of hospital/system bonds that were insured from the pre to the post period. Bond insurance firms tightened their credit criteria after the bankruptcy, which may explain, in part, why the proportion of insured bonds declined. We conclude that hospital bonds are now viewed as riskier instruments than they were prior to the AHERF bankruptcy. This is reflected in higher coupon rates for both insured and uninsured bonds and fewer insured bond issues. This decline in hospital creditworthiness comes at a time when many hospitals need to replace aging assets and acquire new technologies in response to increased inpatient utilization.
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Bankruptcy risk and state regulation of continuing care retirement communities.
Continuing care retirement communities (CCRCs) often require substantial financial investment from residents, prompting concern about potential losses to residents in the event of a CCRC's bankruptcy. State governments have responded to this concern with varying levels of regulation. Overall, CCRC bankruptcy rates are very low (.3% per year). We found that measures of varying regulation stringency had no effect on indicators of CCRCs' financial performance relating to bankruptcy risk. CCRCs that offer extensive contracts, including unlimited long-term care in addition to housing, have less positive indicators of financial strength than other types of CCRCs. When measured by traditional health care industry standards of financial strength, CCRCs appear less profitable than other types of health care facilities. This raises the question of whether CCRCs can continue to attract the needed capital from private markets and because of that, suggests that their future growth may be limited.
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Medical bankruptcy: myth versus fact.
David Himmelstein and colleagues recently contended that medical problems contribute to 54.5 percent of personal bankruptcies and threaten the solvency of solidly middle-class Americans. They propose comprehensive national health insurance as a solution. A reexamination of their data suggests that medical bills are a contributing factor in just 17 percent of personal bankruptcies and that those affected tend to have incomes closer to poverty level than to middle class. Moreover, for national health insurance to have an impact, it would have to define "medical" expenses in a much broader way than is now typical of either private or government-funded plans.
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Surviving bankruptcy. Choate-Symmes emerges with plans to thrive.
Choate-Symmes Hospitals was a trend-setter in 1981 when it was formed to take advantage of economies of scale. Now the system, which has emerged from bankruptcy reorganization, may again prove a leader for the growing number of financially strapped hospitals and systems that could be facing a bankruptcy filing.
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'Prepackaged' bankruptcy wraps up process quickly.
Charter Medical Corp. has joined a small group of companies that have turned to prepackaged bankruptcy plans to quickly and efficiently restructure debt. By reaching agreements with creditors before going to court, distressed companies can shorten the time it takes to emerge from bankruptcy and greatly reduce expensive professional fees.
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Health care insolvency and bankruptcy.
Bankruptcy is an event that is often considered a business' worst nightmare. Debt, lawyers, and the U.S. government can lead to the eventual destruction of a business. This article shows how declaring bankruptcy can be a helpful instrument in continuing a successful venture in the health care marketplace.
Bankruptcy↗
Bankruptcy opportunities and pitfalls: strategies for restructuring and unwinding integrated delivery systems.
Many organizations in the healthcare field are facing issues regarding the "dis-integration" of previously assembled integrated delivery systems. In many situations, bankruptcy is the most effective effective means for pursuing this course of action. This article examines and explains the bankruptcy process, its applicability to an IDS, and strategies for dealing with the process.
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Recovery of Medicare and Medicaid overpayments in bankruptcy.
Mr. Roest argues in favor of the Third Circuit's decision in University Medical Center v. Sullivan to advance the proposition that the Doctrine of Recoupment should be applied narrowly in health care bankruptcy cases. The article begins by introducing key provisions of the Medicare Act and Bankruptcy Code, and by distinguishing between recoupment and setoff. The article then focuses on the Third Circuit's decision, giving both a sketch of the court's decision and a commentary on the holding. The article concludes with a discussion of recoupment-related issues left open by the University Medical Center decision.
Bankruptcy↗
At-risk providers hit again. Like NCFE before it, DVI files for bankruptcy, threatening access to capital for struggling and start-up healthcare providers.
Healthcare lenders National Century Financial Enterprises and DVI have fallen on hard times. One NCFE official pleaded guilty to fraud and DVI filed for bankruptcy last week. However, many say DVI's collapse won't reverberate through the industry like the fall of NCFE did. The president of Cypress Partners, Joseph Paul, left, says DVI's bankruptcy won't affect profitable, well-run companies.
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Health care costs and personal bankruptcy.
In response to published but unconfirmed reports that health care costs were a leading cause of personal bankruptcy in the U.S., court records of all bankruptcy petitioners in one judicial district were examined. The records were analyzed by income, employment, debt categories and amounts. Within the limitations of the study, health care costs seem not to have played a significant role in the financial lives of this population.
Economics↗