The global economy has undoubtedly been tumultuous across all sectors. The healthcare industry has faced unique turmoil over the past few years, especially with significant fluctuations due to the Covid-19 pandemic, which, for many organizations, entailed an unprecedented shock to status-quo financial pipelines, Forbes writes.
Last week, Moody’s issued a “downgrade” rating for Envision Healthcare, one of America’s largest physician-based healthcare groups. The rating agency explained plainly: “The ratings downgrade reflects Moody’s view that Envision’s capital structure is unsustainable, that the probability of a bankruptcy or major restructuring is high, and that recovery rates for much of the company’s debt will be low. The company’s ongoing decline in profitability, weak liquidity, and Moody’s expectation that operating performance will continue to deteriorate given labor pressures impacting the industry and rising interest rates that will cause interest expense to nearly double. The refinancing has not materially reduced debt, and while the maturities have been extended, Envision remains at risk of being unable to service its debt.”
Envision is by no means the only organization that is facing this struggle. Earlier this month, Borrego Community Health Foundation, a prominent healthcare group in California, filed for bankruptcy. The organization is noted to have a roster of nearly 120,000 patients across numerous undeserved communities.
During times of financial difficulty, healthcare organizations often depend on more metric driven care in order to attain more detailed accounting of staff timing and productivity. They also prioritize higher value products, which may impact the allocation of resources and staff to other low-yield but necessary services. This often takes a toll on healthcare workers, leading to increased attrition—which then feeds back into the original problem and causes a vicious cycle. Read more.
