What Rising Healthcare Bankruptcies Mean for Behavioral Health


New bankruptcy figures point to potential strains in the health sector as tough economic conditions surface and the impact of pandemic-era aid fades further into the past.

The behavioral health sector appears to be less at risk of bankruptcy than other health care sectors, but an analysis report by national health law firm Porcinelli and data aggregator Troller BK finds the first quarter of this year to be an overall economic crisis. was found to have increased to

While the first quarter results have yet to show an upward trend in Federal Chapter 11 filings, they do point to continued economic pressure from high interest rates and inflation as risk factors.

“In some ways, the healthcare industry is in constant turmoil,” Jeremy Johnson, a bankruptcy and restructuring attorney at Polinelli and co-author of the report, told Behavioral Health Business. “However, because many medical businesses received a lot of money and a lot of support, medical care was left somewhat unscathed by the impact of COVID-19.” [from] government. “

Traditionally, most bankruptcies have been accounted for by institutions for the elderly, such as nursing homes and caregiving retirement communities. Now, the number of hospital bankruptcy filings is up slightly, Johnson added.

The healthcare sector has seen a higher overall level of business distress compared to 2010, the base period for the report. However, the woes, as measured by the Porcinelli Troller BK Index, decreased slightly quarter-over-quarter and year-over-year in the first quarter. .

The largest and smallest healthcare companies accounted for 81% of bankruptcies. Companies with assets between his $1 million and $10 million account for 39% of his filings. 42% had assets between $500 million and $1 billion

Polsinelli and TrollerBK track changes in Chapter 11 filings for private and public companies with more than $1 million in assets.

These bankruptcies include the now defunct Delphi Behavioral Health Group and its subsidiaries. The company’s main lender, Brightwood Capital Advisors, acquired the remaining three properties without competitors in a stalking horse bid, according to court records.

Other notable recent bankruptcies include Pear Therapeutics, the first company to receive FDA approval for a digital therapeutic. That was in 2017. The company filed for bankruptcy in April. It has raised $409 million, including the IPO, according to crunchbase.com.

Despite these setbacks, Behavioral Health has seen no notable bankruptcies outside of Delphi Behavioral.

Tani Weiner, an M&A lawyer and principal at Porcinelli, told BHB that the “behavioral landscape seems to be very healthy in general.” “Investment interest in action companies remains strong.”



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