Becker's has reported on eight hospital bankruptcies so far in 2023, most of them smaller rural facilities. Some of the facilities remain non-operational, having closed before bankruptcy filings, but most have remained open as, in some cases, they look for partnerships to help right the ship.
Exacerbated by the COVID-19 pandemic, growing operational losses have contributed significantly to the need to enter bankruptcy protection as the hospitals battle unsuccessfully with lower reimbursement models and declining volumes. Five of the eight hospitals are located in two states, California and Texas.
Here is a summary of the eight bankrupt hospitals:
- St. Margaret's Health, which has been closed since June, filed two petitions of Chapter 11 bankruptcy for its St. Margaret's Spring Valley (Ill.) and St. Margaret's Peru (Ill.) facilities. The filing expedites the purchase of the hospitals by Peoria, Ill.-based OSF Healthcare.
- The Hospital at Westlake Medical Center, a physician-owned hospital in Westlake Hills, Texas, is filing for Chapter 11 bankruptcy protection. The hospital, which had significant debt before the COVID-19 pandemic, has been further burdened by labor and supply inflation. The hospital will continue all its operations during the bankruptcy proceedings.
- Another Texas hospital, Trinity Regional Hospital Sachse (Texas), entered bankruptcy proceedings just two years after opening. The rural hospital, which is looking for a buyer, has since defaulted on around $70 million of municipal bonds that were issued in 2020.
- Martin General Hospital, a 49-bed facility in Williamston, N.C., suspended operations Aug. 3 and plans to file for bankruptcy. The hospital, which lost $13 million in 2022, cited financial challenges related to declining population and utilization trends as reasons for the decision.
- Mercy Iowa City filed for Chapter 11 bankruptcy Aug. 7. The filing includes a reference to a letter of intent between Mercy Iowa City and the state of Iowa that outlines a plan to transition the hospital to become part of UI Health Care. However, major bondholders are unhappy with the $20M valuation of the facility and are seeking a more competitive bidding process.
- San Benito Health Care District, the board overseeing Hollister, Calif.-based Hazel Hawkins Memorial Hospital, voted May 22 to file for Chapter 9 bankruptcy. Since the filing, Hazel Hawkins has signed an agreement with Modesto, Calif.-based American Advanced Management to operate the hospital.
- Madera (Calif.) Community Hospital filed for Chapter 11 bankruptcy March 10. The hospital officially closed at midnight Dec. 30 after Livonia, Mich.-based Trinity Health's plan to buy the hospital fell through.
- Montebello, Calif.-based Beverly Hospital filed for Chapter 11 bankruptcy April 19. The hospital secured $13 million in financing to keep operating as it looks for a buyer.