Becker's Hospital Review

22 CFO / FINANCE 3 Factors That Could Influence Hospital Bankruptcies in 2017 By Ayla Ellison T he number of hospital bankrupt- cy filings may increase in 2017, as providers struggle with a challenging reimbursement landscape, higher supplies costs and the uncertainty surrounding the ACA. Here are three factors that could influence healthcare bankruptcy filings next year, ac- cording to a Lexology report by Foley and Lardner. 1. Challenging reimbursement land- scape. Many health systems across the nation will see a decline in Medicare reimbursements in 2017, as alternative payments models take hold and payments are more closely tied to quality and value. In March, HHS hit its goal to have 30 percent of all Medicare provider payments fall under an alternative payment model, which includes ACOs, patient-cen- tered medical homes or bundled payments. is trend will continue, as the benchmark is to have half of all Medicare payments fall un- der an alternative model by 2018. e move to alternative payment models has negatively affected margins on hospital Medi- care business. Provider organizations that treat large Medicare populations will need to adapt their business models in 2017, and some distressed facilities may explore bank- ruptcy to regain their financial footing, ac- cording to the report. 2. Soaring expenses. As supplies costs rise and hospitals invest in technology and hire more employees, some hospitals may see expenses outpace revenue. "Ultimately, the cost of care in combination with decreasing reimbursements and difficulties in collect- ing accounts receivable may continue the increasing healthcare bankruptcy filings in 2017," according to the report. 3. Uncertainty about the ACA. Some form of an ACA repeal is a high priority for Republican lawmakers and President-elect Donald Trump. Dismantling the ACA would significantly affect hospitals and health sys- tems and could put financial pressure on some provider organizations, according to the report. According to a Fitch Ratings re- port released in November, rolling back the ACA would be credit negative for healthcare providers. e health reform law has contrib- uted to hospitals seeing higher volumes of insured patients, and those volumes would drop if the ACA is repealed or materially re- placed, according to Fitch. n Texas Hospital Abruptly Closes After Failing to Make Payroll By Ayla Ellison Weimar (Texas) Medical Center shut down Nov. 25, and the future of the facility is uncertain. WMC employees are paid on a bi-weekly basis, and pay- checks were due to them Nov. 25. However, the hospital failed to make payroll due to financial troubles, forcing the facility to cease services, according to The Colorado County Citizen. WMC Administrator and President Irving Sawyers Jr. told The Colorado Citizen after the hospital failed to make pay- roll there was not enough staff available to treat potential patients. Mr. Sawyers said he became aware of the payroll issue when his check wasn't deposited into his account. Before WMC closed its doors Nov. 25, the 38-bed hospi- tal's only inpatient was discharged and emergency room patients were treated and discharged, according to the report. Mr. Sawyers told The Colorado Citizen the hospital would reopen once it regained its financial footing. As of last week, Mr. Sawyers hoped the hospital would be back in service by Dec. 2. However, as of Dec. 6 the hospital was still closed. WMC is owned by Price Family Capital Partners, and a sign on the door to the hospital indicates the Anaheim, Calif.-based investment firm is selling the facility. "Reinstatement of all suspended services is intended as soon as possible after the completion of the acquisition process," the sign reads. "The acquisition will allow for physician and personnel staffing of the emergency de- partment and the full hospital targeted for Dec. 12, 2016." Although no details about the acquisition have been re- leased, Mr. Sawyers told a group of WMC employees Nov. 28 he had met with some undisclosed investors who were interested in buying the facility, according to The Colora- do Citizen. Mr. Sawyers didn't immediately respond to Becker's re- quest for comment. According to a crowdfunding page created for WMC employees, the hospital had not made payroll as of Dec. 6. This isn't the first time a Weimar hospital has experienced financial troubles. Colorado-Fayette Medical Center in Weimar filed for bankruptcy and closed in 2012. Price Family Capital Partners reopened the facility in 2015 and renamed it Weimar Medical Center. n

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