Healthcare bankruptcies declined in 2024: report

Dive Brief:

• Healthcare bankruptcies declined in 2024, but the sector still recorded the second-highest number of filings in the past six years, according to a report by restructuring advisory firm Gibbins Advisors.
• The analysis, which tracked bankruptcies with liabilities exceeding $10 million, found 57 healthcare filings last year, down from 79 in 2023. However, the number of bankruptcies still surpasses the average of 42 filings per year from 2019 through 2022.  
• The sector continues to face financial headwinds, like workforce shortages, high labor costs and pressure from payers, Gibbins said. A growing gap between financially successful and struggling providers means some organizations are better prepared to weather these challenges.

Dive Insight: 

The decline in bankruptcies last year was driven by a significant decrease in the number of middle-market filings, or bankruptcies with liabilities between $10 million and $100 million, according to the report. The sector saw only 34 middle-market filings in 2024, compared with 51 cases in 2023. 

However, very large filings with liabilities above $500 million remained high. The report found nine large bankruptcy cases last year, compared with 12 in 2023 — still far ahead of the average of three cases each year from 2019 to 2022.

Bankruptcies among senior care and pharmaceutical firms made up nearly half of all filings in 2024, following a trend from previous years, Gibbins said.

Cases at clinics and physician practices continued to rise, reaching 10 filings in 2024, compared with an average of only four per year from 2019 to 2023. 

“We’ve already observed a rise in bankruptcy filings among physician practices, and the 2.83% reduction in Medicare’s physician fee schedule for FY2025 will further strain this sector, impacting both physician groups and the hospitals that own them,” Clare Moylan, principal at Gibbins, said in a statement. “Given these trends and our ongoing experience, we anticipate an increase in physician practices needing restructuring support in 2025.”

Hospital bankruptcies fell last year. Only five hospital operators filed for bankruptcy in 2024, compared with 12 in 2023. 

The sector still faced major upheaval with Steward Health Care’s high-profile filing last spring. The filing was the largest hospital bankruptcy in 30 years, according to Gibbins. 

Steward managed 31 hospitals across eight states, and its bankruptcy set off a flurry of asset sales — as well as facility closures.