Senior living-focused organizations, independent and assisted living communities, and skilled nursing facilities made up a significant portion of healthcare bankruptcy filings in the fourth quarter of 2021, according to a new report.
The Polsinelli-TrBK Distress Indices report, released by the Polsinelli law firm, noted that as the healthcare sector begins a return to pre-pandemic normalcy, senior living communities and organizations are dealing with decreased census, increasing operating costs and significant pressures on staffing and labor costs.
“We anticipate that the bankruptcy filing numbers will continue to increase, especially in the healthcare and real estate industries, as we enter 2022,” said Polsinelli Shareholder Jeremy Johnson, a bankruptcy and restructuring attorney and co-author of the recently released report. “We haven’t seen the end of COVID-19 yet, and the massive federal assistance that has kept facilities afloat will end soon.”
The Polsinelli-TrBK Distress Indices quarter report tracks the increase or decrease in all Chapter 11 filings with more than $1 million in assets since the fourth quarter of 2010. It includes both public and private companies, providing breakdowns of distress specifically in the real estate and healthcare services sectors.
The Health Care Services Distress Research Index was at 196.67 four the fourth quarter 2021 — a 108-point increase over the third quarter and the second consecutive increase in healthcare bankruptcy filings.
After two relatively slow quarters, the number of healthcare filings appear to be increasing, with the largest number of filings since the second quarter of 2020.
For healthcare filings in the fourth quarter, Delaware topped the list in the fourth quarter, at 55.1% of healthcare filings among eight regions, with the Southeast region next in line at 25.42%.
When it comes to overall bankruptcy filings, the fourth quarter 2021 Chapter 11 Distress Research Index was 39.60, which reflects a decrease of nine points since the third quarter. Compared with the same period one year ago, the index decreased more than 47 points.
The Southeast region reported 43.32% of overall Chapter 11 bankruptcy filings, with Delaware coming in second with 22.47% of bankruptcy filings. The two regions are the busiest overall bankruptcy venues in eight regions.
To access the full report, visit the Polsinelli-TrBK Distress Indices website.