Becker's Hospital Review

18 CFO / FINANCE Hospital bankruptcies continue to skyrocket By Alyssa Rege M ore than 20 hospitals have filed for Chapter 11 bankrupt- cy since 2016, according to an Oct. 30 report from the law firm Polsinelli. The Polsinelli-TrBK Distress Indices Report details how healthcare trends have affected the U.S. economy. Re- searchers determined that while the economy, specifically Chapter 11 bankruptcies across all industries and the real estate industry, have re- mained stable during the past several quarters, healthcare exhibited consis- tently high levels of distress during eight of the last 11 quarters. To compile the report, researchers used Chapter 11 bankruptcy data as a proxy for measuring financial dis- tress in the overall U.S. economy and breaking down the distress specifical- ly in real estate and healthcare. Here are three things to know: 1. Southwestern states have been hit the hardest by healthcare bankruptcy filings. For example, increased com- petition, insurance payer pressure and overexpansion contributed to Neighbors Legacy Holdings in Hous- ton, a freestanding emergency facility operator with more than 30 facilities, to file for bankruptcy earlier in 2018. 2. While general Chapter 11 bank- ruptcies have decreased 53 percent from the 2010 benchmark, healthcare industry distress increased by 305 percent during the same period. 3. The law firm's Health Care Services Distress Research Index was 405 for the third quarter of 2018, an increase of 65 points from the second quar- ter of 2018. The third-quarter figures represent a year-over-year increase of 82 points. n Louisiana hospital files for bankruptcy, blames ex-administrator for financial crisis By Ayla Ellison D octors Hospital at Deer Creek, a physician-owned hospital in Leesville, La., entered Chapter 11 bankruptcy Oct. 18. In documents filed in the bankruptcy case, Gregory D. Lord, MD, a man- aging member of the hospital, said a former hospital administrator is to blame for the hospital's current financial troubles. "The Chapter 11 filing was necessitated by a financial crisis resulting from Medicare overpayments caused by the actions of a prior administrator at the hospital," Dr. Lord said. The hospital is currently paying back certain overpayments, but it does not have enough cash flow to pay back further overpayments that are likely to be assessed. "Because of this, Medicare is likely to offset the overpayments owed by with- holding all future Medicare payments to DHDC," Dr. Lord said. "Once Medicare begins offsetting the overpayments from future payments, DHDC will have to close its hospital, as there will be insufficient financial resources for the hospital to continue operations." DHDC leaders determined the only feasible option is to service current debts, curtail additional debts and secure a buyer. DHDC submitted a purchase pro- posal to the bankruptcy court. In its bankruptcy petition, DHDC listed its assets as between $1 million and $10 million and listed its liabilities in the same range. n LifePoint sees net income decline 19% in Q3 By Kelly Gooch B rentwood, Tenn.-based LifePoint Health saw revenues and net income attributable to the company decline in the third quarter of 2018. LifePoint recorded revenues of $1.56 billion in the third quarter of 2018, down from $1.58 billion in the same period a year prior. e decline is partially due to LifePoint operat- ing 68 hospitals in the third quarter of 2018 compared to 72 in the third quarter of 2017. On a same-hospital basis, revenues rose 2.1 percent year over year. LifePoint saw the effects of lower admissions, inpatient surgeries and emergency room vis- its in the third quarter of 2018. Year over year, they declined 4.7 percent, 7.1 percent and 9.1 percent, respectively. On a same-hospital basis, inpatient surgeries and emergency room visits declined. But admissions rose slightly (0.1 percent) and outpatient surgeries were up 0.7 percent. LifePoint's financials also factored in expenses and losses, including an impairment loss re- lated to LifePoint's proposal to terminate its lease agreement with Teche Regional Medical Center in Morgan City, La., as well as expenses related to its planned sale to private equity firm Apollo Global Management. Aer factoring in those expenses and losses, LifePoint ended the third quarter of 2018 with net income attributable to the company of $22.3 million, down 18.9 percent from $27.5 mil- lion in the third quarter of 2017. n

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