Obamacare Set To Drive New Wave Of Hospital Bankruptcies

Tyler Durden's picture

Back in 2008, one of the biggest arguments in favor of Obamacare was that the legislation would help alleviate bad debt at hospitals created by people who required emergency care but didn't have health insurance or the financial means to cover their treatment.  Of course, like most promises made about Obamacare, the exact opposite of the Left's original theories has played out in reality as restructuring lawyers are now warning that the healthcare industry is about to experience a massive wave of hospital bankruptcies.  Per Bloomberg:

A wave of hospitals and other medical companies are likely to restructure their debt or file for bankruptcy in the coming year, following the recent spate of failing retailers and energy drillers, according to restructuring professionals. Regulatory changes, technological advances and the rise of urgent-care centers have created a "perfect storm" for health-care companies, said David Neier, a partner in the New York office of law firm Winston & Strawn LLC.

 

Some signs are already there: Health-care bankruptcy filings have more than tripled this year according to data compiled by Bloomberg, and an index of Chapter 11 filings by companies with more than $1 million of assets has reached record highs in four of the last six quarters, according to law firm Polsinelli PC. Junk bonds from companies in the industry have dropped 1.4 percent this month, a steeper decline than the broader high-yield market, according to Bloomberg Barclays index data.

 

Since 1997, health-care cases have made up only 5.25 percent of all U.S. bankruptcy filings, according to Bloomberg data. Year to date, they already comprise 7.25 percent of all filings. Emergency-room operator Adeptus Health, cancer-care provider 21st Century Oncology, and cancer treatment specialist California Proton Treatment are the largest filings. Those statistics exclude pharmaceutical company Concordia, which is restructuring in Canada, and Preferred Care Inc., one of the U.S.’s largest nursing home groups, operating 108 assisted living facilities.

Hospital

So what has caused the sudden onset of hospital failures?  Well, because Obamacare's architects were so certain their legislation would completely eliminate uninsured citizens in the U.S., they decided to offset the costs of the "Affordable Care Act" by eliminating subsidy payments to hospitals that had previously been used to cover losses from treating uninsured patients...

Hospitals, including private rural ones, may be among the hardest hit, Winston & Strawn’s Neier said. The Affordable Care Act, known as Obamacare, reduced payments to hospitals that serve a large number of poor and uninsured patients, known as "disproportionate share hospitals," on the theory that more patients would be insured under the law. Congress delayed those cuts several times, but didn’t do so for the current fiscal year, which may "single-handedly throw hospitals into immediate financial distress -- many operate on less than one day’s cash,” he said in an interview.

 

"Smaller hospitals have already been struggling for years,” said Kristin Going, a partner in the New York office of Drinker, Biddle & Reath LLP. Both lawyers declined to discuss specific companies. Since 2010, a growing number of patients have enrolled in high-deductible health plans that force them to shoulder more of costs when they get treatment, according to the U.S. Centers for Disease Control and Prevention. That has translated into more bad debt from customers for hospitals and other providers.

 

Some publicly traded hospital companies that were already under pressure from high debt loads have been further buffeted by this year’s hurricanes. Community Health Systems Inc., with $1.9 billion in debt maturing in 2019, has suffered doctor revolts over crumbling, cash-strapped facilities, as well as losses linked to the storms in Texas and Florida earlier this year. A representative for Community Health didn’t return a call seeking comment.

...of course, here in reality, things didn't quite play out so perfectly as surging Obamacare premiums have pushed more and more people into  high deductible plans or have forced them to forego insurance altogether and opt instead to simply pay the tax penalties levied by the legislation.  Shocking that folks could simply absorb a doubling of their healthcare premiums in 4 years.

Just more proof that Obamacare is working perfectly and should be left just as it is...

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Vilfredo Pareto's picture

For those on full subsidy who didn't previously qualify for Medicaid it is superawesome.  They had nothing before.

 

For me obamacare has not been kind.

 

To echo law of physics jump you fuckers.

MonetaryApostate's picture

Obamacare driving record homelessness rate, fixed!

Catahoula's picture

Let them fall. Cut the taxpayer subsidies. Cut the mandate. Repeal socialist Soetero care!

dasein211's picture

What’s the solution then? Serious answers please.

Scornd's picture

Go to war with Bank of England and stop being a Crown Corp.

GunnerySgtHartman's picture

The solution is to pay out of pocket for doctor's office visits.  $50/month gets you all of the doctor's visits you want, plus pharmaceuticals at 90% or more below list price and lab procedures at deep discounts.

https://www.theobjectivestandard.com/issues/2013-fall/dr-josh-umbehr-on-concierge-medicine-revolution/

Then buy a major medical policy for the big stuff.

If you really want to drive costs down, you have to get government and insurance companies out of the health care business.  And remember, the government caused our current health care problems - FDR's wage freeze during World War II is the root cause of the problem.

LawsofPhysics's picture

So many economic issues in the world are due to one thing, far too many overcompensated useless fucking middlemen stuck between the consumer and the producer.

Fuck em, jump you fuckers!

Bigly's picture

I looked into doing this. Around my way, it is 200/mo, not 50.

Bob's picture

lol, arounds where i live, that costs about $2,000 a month for insurance. with a small copay. 

methinks people recklessly trust the doctors to make less money because it's the right thing. willingly!

doctors are like beautiful women.  because the assholes deserve it. 

only way they'll go is kicking and screaming about socialized medicine! 

consumate bullshitters, those vampire bitches.

Scornd's picture

What EXACTLY do you think the problem is?

Alananda's picture

My solutions, suggested for your consideration.
Eat the purest food you can garner, prepared with care and love.
Breath the cleanest air you can -- indoor filters at least.
Drink either filtered or, if available, pure well water.
Practice prayer and fasting and meditation.
Associate only or mainly with those willing and able to uplift, doing unto others as you would have others do to you.
Love GOD, love your neighbor as yourself.
Give, expecting nothing in return.
Ask, and believing, receive with great gratitude.
You may well think of other solutions along your way.

LawsofPhysics's picture

Correct. In fact, any sytem that rewards bad behavior will fail. this is not that hard people.

WakeUpPeeeeeople's picture

How about getting off one's fat ass and getting outdoors. Mow grass, rake leaves, ride a bike, walk or jog around the block

RAT005's picture

Walk the dog, they will love you for it!

38BWD22's picture

 

 

Most excellent suggestions.  Some of those have worked out beyond belief for me.

+ eternity

RAT005's picture

I would add: reduce time with gadgets, increase rest time and genuine intamacy.

Scornd's picture

Non religious folks (Christians mostly) have co ops where people subsidies each other. Understand that the govt making you do anything and you doing it is religion. Get out of religion it's killing you.

how_this_stuff_works's picture

"Non religious folks (Christians mostly) have co ops where people subsidies each other."

Non religious---Christians?

Did I read that right?

LawsofPhysics's picture

Let people who make poor decisions regarding their health, suffer real fucking consequences for their own choices!!!

Any system that continues to reward BAD BEHAVIOR will fail!!!!

Fucking duh!

The same logic should also be applied to banking and finance.

Alananda's picture

How much more charitable can you be? How deeper an understanding can you have? Your seemingly Darwinian perspective bothers me. I hope others treat you more kindly than you appear willing to treat others.

shovelhead's picture

You forgot the ever popular but meaningless jump you fuckers & full faith and credit.

Robo trolls need to be consistent.

Bigly's picture

It used to be called moral hazard

GunnerySgtHartman's picture

Bankruptcy of small hospitals was predicted over five years ago.

https://www.kevinmd.com/blog/2012/03/onethird-hospitals-close-2020.html

If you want to screw something up even more than it already is, just let the government get involved.

trillion_dollar_deficit's picture

Poeple have no idea the damage Obamacare has done to rural healthcare - and by proxy the forcing of EMR on these facilities. Bankruptcies galore. Don't let stock prices of the larger insurers and healthcare provider companies fool you. Its a total disaster and it will only get worse. 

swmnguy's picture

The problem is finance, not healthcare.  My parents live in rural Minnesota and are in failing health.  They've gotten fantastic care.  They're completely broke, so I'm sure Medicare is footing the bill.

But the hospital is owned by one out-of-state corporation, the clinic by another, and the Emergency Room by yet a third entity.  In the same building, mind you.  The three companies hate each other and obstruct the transfer of information.  So when my Dad collapsed and was taken by ambulance to the ER, fortunately a synpathetic nurse who knew my family slipped the paperwork to my Mom, to take to the Hospital across the hall so the Hospital staff would know what the ER staff had done.  By that point my Mom got the joke, and got a Hospital nurse to slip her the paperwork, so she could take the ER and Hospital paperwork to the Clinic, where their regular doctor works.  Thank goodness for that.  The Clinic wasn't able to get the paperwork through official channels for several days, through the mess of 3 different corporations fighting with each other.

Right now I'm collecting as much money as I can grab from pharmaceutical companies.  My work involves producing business meetings, and ObamaCare has been a great gift to the meetings industry.  All the pharma people talk about is how to manipulate the paperwork process to get their patients financially qualified to get their drugs.

Of course it's going to collapse.  Next Finance crisis ought to do it.  The Finance crisis in Rural America has been ongoing for about 40 years now, and is separate from the Healthcare Finance crisis, which has been going on since before 1973, but is reaching critical mass soon.

Vilfredo Pareto's picture

Those entities might or might not hate each other, but that isn't the reason it takes so long.  Three days to get records thru official channels from a hospital?  Try three weeks, even with electronic medical records here.  I am just happy if a patient can show up with a med list.  At least in my profession I can reconstruct the care and thoughts of the hospital from there.

Vilfredo Pareto's picture

EMR?  Electronic medical records?  What a fraud.  $20,000 per physician annual subscription for a file sorting and encrypted messaging system.  You are penalized by gooberment if you bill gooberment insurance and don't pay those rip off rates as of 2018.  What is a poor rural hospital dependent on medicaid and medicare to do?  Suck it up and add that too the expense line.

 

Thanks to all the crazy complex rules that continually change and all the "certifications" necessary to be able to supply the software.

 

Microsoft could do it for $300 per year otherwise.

William Dorritt's picture

ObamaCare Rent Seekers

Gore and Bush clanes reniched from Communist Core Text Books

Who is enriched by the EMR systems? Every memeber of Congress?

Alananda's picture

Disease care. Fixed that.

RopeADope's picture

Zerohedge is really putting up some garbage articles these days.

 

GOP controlled states blocked Medicaid payments that were supposed to cover the shortfall. All part of the GOP/DEM donor's path to turn America into a 3rd world shithole.

 

There used to be a time that the ZH article writers would not claim that there was such a thing as left and right in such a gradeschool manner. Continue trashing your brand ZH.

JoseyWalesTheOutlaw's picture

so the states are supposed to pickup the tab for LBJ's great slacking society of GD trash? I assume you meant the state taxpayer? 

Stop oaying fuking ghetto welfare trash to continue breeding!!!!!!!!! Stop today.

 

Remove anybody receiving welfare from being able to vote and the democratic party is fuking Done. 

If all you do is take then you get no say!!!!!!!

 

slightlyskeptical's picture

Red states have highest % of people getting welfare benefits. Be careful what you wish for.

two hoots's picture

I guess bankruptcies are a part of Pelosi’s passing it to see what’s in it?   Is this the Ryan/McConnel way for tax overhaul, pass it to see what’s in it?  When you (gov) want something badly, you usually get it badly.

 

LawsofPhysics's picture

All by design folks. Your real owners keep increasing the rent and no one seems to care.

Oh well.

"Full Faith and Credit"

venturen's picture

How about an index of Healthcare people donating to Democrats? Or an index of people being paid a million or more a year at hospital and drug companies? 

Democrats are all about the have and HAVE NOTS

hedgeless_horseman's picture

 

Who controls the House, Senate, and Presidency?

Red Team, Blue Team, same League ownership.

http://www.zerohedge.com/news/2016-03-17/be-very-wary-choices-you-are-gi...

Herdee's picture

December should be very interesting for debt everywhere.

A1 T's picture

You should have learned from what has been going on in Canada. 

hound dog vigilante's picture

 

Ask a democrat - any democrat - about Obamacare, and they will tell you 1) it is working & wonderful, and 2) any problems or issues with the ACA were 100% caused by republicans.

 

Obamacare will collapse under the weight of it's own poor design, but it WILL be martyred by progressives as a "great" system that was killed by Trump/GOP.  The media will beat this martyred horse FOR DECADES, regardless of how false the narrative might be. 

 

Progs will NEVER admit their failures. Never. Instead, they will continue to use the media to reinforce/construct a bizarro alternative reality wherein progressivism is always successful & correct, to the exclusion of all other views.

Dems/progressives will continue to lose, as their fantasy world diverges ever-further from actual reality...  it's all so predictable.

swmnguy's picture

Democrats can call themselves "Progressives," but that doesn't make them Progressive in any way.  So people who hold actual Progressive opinions and values have to call themselves something else, I guess.

No actual "Progressive" supports keeping the Insurance sector of the Finance industry at the center of a system of corporate interests to provide health care.  There's no more costly or inefficient way to do it.  "Progressives" want to put everyone on Medicare; remove the cap on income subject to Medicare taxation, apply Medicare taxation to all income instead of just punishing work; and relegate private insurance to optional supplemental policies only.

DaveA's picture

"remove the cap on income subject to Medicare taxation"

They did that c. 1993. Social Security still has an income cap, but that money is for retirement income, not universal health care.

You are getting toward the Australia/Brazil/Thailand solution. A government-run public healthcare system that anyone may use for free plus a free market system for those who can afford it. Don't forget to wear the necklace with your insurance medallion, so that if you have a heart attack, the ambulance takes you to a private hospital.

Vilfredo Pareto's picture

That is the only stable, efficient long term solution that doesn't distort the economy due to excessive cost.

hound dog vigilante's picture

 

and yet every single "progressive" that i know/meet/see/hear violently defends the ACA. I can't find even one Progressive anywhere that is talking about repeal & replace (w/ universal medicare) - they ALL want to keep the ACA (insurance-centric) framework.  It can't work, but they are fighting for it nonetheless.

 

This is a big part of the Left's immediate credibility problem... saying one thing but doing something else.  The Right has the same problem... their ideological campaign promises do not even remotely match the legislation they produce.  See the ACA from the Dems, and 'tax reform' from the GOP... both are a bad joke... ideologically opposite of the promises made to their rexpective bases.

 

Dems & GOP have the same problem: neither party can satify their increasingly 'radical' base... progs on the left, smallguv nationalists on the right.

RabbitChow's picture

Shut down the gubmint.  And Obamacare while you're at it, too.  

You got health problems?  Sorry, Trumpster says no health care for you!

roadhazard's picture

A hospital go bankrupt... lol.

GunnyG's picture

Think its funny? Wait until you need to go and get that cucumber out of your ass that your gay lover shoved up there and there ain't a hospital around. 

The illegal aliens destroyed the County Hospital infrastructure and now the Dems finish the job.

how_this_stuff_works's picture

"A hospital go bankrupt..."

I have a friend who needed urgent/emergency services about a week or so ago. He related that another patient there had no insurance. How did he know this? Every time a worker went NEAR this patient someone shouted, "No insurance, he has no insurance."

In other words, they all knew to be careful about what they did to treat this patient because they weren't going to get paid for it.

Catullus's picture

Healthcare accounting is the biggest farce going. How would they even know they're bankrupt? They just can't pay a bill one day?