US healthcare bankruptcies soar as costs mount

Steven B. Smith, partner in Herrick's Restructuring & Finance Litigation Department, was quoted in the Financial Times about what led to multiple bankruptcies filed by large healthcare companies in 2023.

The article noted a significant increase in Chapter 11 filings in 2023. "Healthcare has historically been perceived as always in demand, perhaps inflation resilient. But in the pandemic, you had low interest rates, lender concessions, government funding for healthcare providers, all those factors deferred some of the fundamental issues hitting the most fragile businesses," explained Steven.

The article highlighted that the current outlook for the healthcare industry remains grim. "Margin squeeze, economic contraction, staffing shortages and regulatory scrutiny are mounting systemic challenges," Steven said. "All these factors have made healthcare a tough environment generally to succeed in."

Read the full article in the Financial Times here. Access may require a subscription.