No Surprises law weighs heavily as bond debt looms

Healthcare companies and their investors are looking carefully at maturing debt amid growing concern over the federal No Surprises Act, Bloomberg News said Nov. 13.

The law, which Bloomberg said has contributed to the bankruptcies of health-related companies, including Nashville, Tenn.-based Envision Corp. in May, is leading to an "unexpectedly lengthy process" settling disputes over charges between different parties. Such lengthy processes create pressure on cash flow, according to the article.

Add that to existing concerns such as elevated interest rates and labor costs, and there is a mixture of pressures for such companies, experts said.

"It was an exogenous shock to business models that already had very narrow margins for error," Brian Gelfand, co-head of global credit and head of credit trading at TCW Group, said of the new act.

Looming debt maturities are now turning into crucial tests, the report said. For example, health transportation company Global Medical Response, backed by private equity giant KKR & Co., is looking to extend $4.3 billion of debt due in 2025, according to the report.

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