Quorum Health, which operates 24 hospitals in 14 states, is preparing for bankruptcy at the worst possible time: the middle of a global pandemic. The "flood" of coronavirus patients that the hospitals have experienced have put pressure on an already precarious set of financials, leaving the the company little choice, according to Bloomberg.
Quorum's executives are in the midst of negotiations with stakeholders on possible restructuring deals, but at the same time the company is preparing Chapter 11 plans. Earlier this week, the company delayed its annual report filing to focus on negotiations with its creditors. No official decision has been made.
But the worst part is that Quorum's troubles could foreshadow what's coming for the American healthcare system. Even prior to the outbreak, hospitals in rural areas were "losing profitable elective procedures to outpatient facilities while still handling patients who lack good insurance."
And now, hospitals are being forced to cancel optional and elective procedures to make capacity for coronavirus patients. This further squeezes the financials of many of these facilities and federal relief may not be enough to save them. Prior to the virus even becoming a factor, more than 30 facilities went bankrupt last year.
CEO Robert Fish said: “Regardless of the path forward the company chooses, Quorum Health and its hospitals will continue to maintain all operations without any interruption to service.”
Quorum started in 2016 as a spinoff of 38 hospitals from Community Health Systems. It is now down to just 24 facilities and 2,000 beds. The company hasn't been profitable since the spinoff and its 2023 unsecured bonds are trading for about 70 cents on the dollar.
KKR & Co., York Capital Management Global Advisors LLC and Mudrick Capital Management round out a list of the company's stakeholders. KKR offered last year to help recapitalize the company, but noted that it would likely wipe out the company's equity holders.