Hospital Bankruptcy….More to Come?

They are normally amongst the largest employers in a community. Added to that, healthcare facilities have some of the largest budgets in a city or town. But they're not immune to financial challenges. 

If you've been paying attention, you might have noted the increased number of hospitals and healthcare systems declaring bankruptcy. In fact, several publications have indicated that hospital related bankruptcies are trending 25% higher in 2022. In October, Pipeline Health System which consists of seven hospitals in three states, filed for Chapter 11 bankruptcy. Here in November, Hazel Hawkins Memorial Hospital declared bankruptcy. And there are many more.

What's even more scary is that one report in late September indicated that somewhere between 53% and 68% of the nation's hospitals or healthcare systems will finish with negative operating margins in 2022. Add to that the number of hospitals that have just closed. The most discussed is in the WellStar Healthcare System in Atlanta and its closure of a hospital on the South side of town.

For the most part in each case, no matter the location, the rationale given for the bankruptcies is increased labor costs and decreased overall revenues.

What's important to note is that these announcements will not decrease in the next 6 to 12 months. They're only going to grow. And since philanthropy is directly tied as a major sector to the healthcare/hospital world, this has to be a blow not only for those communities but the trust that is, and will be, depleted when there are such dramatic financial struggles.