Healthcare bankruptcies have recently spiked as labor shortages and rising interest rates neutralize an industry boost once fueled by the government’s pandemic aid.
In the first quarter of this year, 17 healthcare companies with more than $10 million in liabilities—ranging from a hospital to senior living centers to early stage pharmaceutical product developers—filed Chapter 11, according to data compiled by Gibbins Advisors, a healthcare restructuring consulting firm. In the year-ago period, seven companies filed, Bloomberg reports.
“Once the government money ran out, once all the stimulus dollars around healthcare ran out, there was essentially going to be this backwash,” Timothy Dragelin, a healthcare director at FTI Consulting said. “The fact that labor costs increased substantially—you also had the issues with supply chain and supply chain caused some disruptions.”
Sluggish economic factors that have contributed to a general rise in Chapter 11s have also hurt the healthcare business. But the industry requires large staffing and the aftereffects of rising labor costs have been particularly acute. Read more.
