Changing the Balance of Power Through Bankruptcy in a Changing Hospital Landscape
In today’s rapidly evolving healthcare environment, heightened scrutiny and regulatory changes present unique challenges for industry professionals. The hospital sector had only five bankruptcy filings in 2024, down from 12 in 2023, but the Steward Health Care System filing included 31 hospitals and was the largest hospital bankruptcy in the last 30 years.
This year has already seen 4 hospital systems file bankruptcy cases, including Prospect Medical Holdings with 16 hospitals nationwide. Current federal budget projections propose $880 billion in cuts over the next decade, which are expected to fall primarily on Medicaid. Medicaid pays for 19% of all spending on hospital care in the United States. Absorbing reductions in Medicaid spending could be challenging for hospitals, particularly for those that care for a relatively large share of Medicaid patients. Rolling back coverage would increase the number of uninsured patients, which could result in higher uncompensated care costs. These cuts could potentially accelerate the pace of hospital bankruptcy cases or outright closures, including in rural areas.
Added to these likely financial pressures, the federal government and state governments are increasing exercising oversight over hospital mergers and acquisitions. For example, in response to concerns about private equity involvement in healthcare, several states are increasing oversight of hospital sales and mergers, with Attorney Generals playing a key role.
Finally, regulatory pressures continue to mount. For example, the US Department of Justice’s Health Care Fraud Unit now has over 80 attorneys pursuing allegations of fraud. The healthcare industry plays a disproportionate role in False Claims Act recoveries, accounting for over $1.67 billion, or more than 57 percent, of the total FCA proceeds in FY 2024 (even though it only represents approximately 19% of total GDP).
Join our speakers, Samuel R. Maizel, Director, Distressed Healthcare, and Tania M. Moyron, Chair, Restructuring, Insolvency and Bankruptcy Group, Dentons US LLP, for this CLE webcast as they explore essential strategies and practices necessary to navigate the increasingly stringent regulatory environment and increasing financial situations facing hospitals and effectively capitalize on new opportunities.
Attendees will gain valuable insights into recent legal decisions which allow hospital owners, sellers and buyers, to more effectively manage mergers and acquisitions, all tailored to the current dynamics of the healthcare sector.
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Partner at Dentons
Tania is the Chair of the US Region Restructuring, Insolvency and Bankruptcy Group and the US Region Co-Chair of the Global Restructuring, Insolvency and Bankruptcy Group, and leads Dentons’ Practice Group Diversity Partners Initiative for the Group. Tania specializes in corporate restructuring, including out-of-court workouts and formal insolvency proceedings. Her representations span a broad range of clients across many sectors, all of which require strategic advice and creative solutions. She has extensive experience representing companies, secured creditors, committees of unsecured creditors and equity committees, liquidating trustees, sellers, and principals in a variety of industries, including health care, agriculture, retail, entertainment, trucking, real estate, and restaurant franchise industries. Her health care clients have included nonprofit hospitals, continuing care retirement communities, and other health care related entities nationwide.
Partner at Dentons
Samuel Maizel leads the Firm’s healthcare industry restructuring efforts nationwide as a partner in Dentons’ Los Angeles Office. His practice includes bankruptcy matters as well as financial restructurings, in- and out-of-court, involving a broad spectrum of industries but he is a nationally recognized expert in the unique issues that arise in the restructuring of healthcare industry entities. In chapter 11 cases, he has served as lead counsel to debtors, trustees and creditors’ committees, and has acted as a trustee, examiner, patient care ombudsman and consumer privacy ombudsman. He has also represented many buyers and sellers of assets in chapter 11 cases. In chapter 9 cases, Sam has represented local hospital districts and other governmental units, serving as debtor’s counsel and as counsel to creditors’ committees.
