10 Things You Need To Know About Health Care Bankruptcies In 2017

The coming year will likely continue to be a tumultuous year for health care providers, suppliers, and payers, as they adapt to meet new challenges and market forces, particularly in light of the open questions as to the viability and continued existence of the Affordable Care Act (ACA) and recent comments made by members of the incoming Trump administration. The following are 10 things to watch in 2017 that may impact the number and progression of health care bankruptcies in 2017.

Changing and Challenging Reimbursement Landscape

Health care systems are struggling to adapt to value-based purchasing, which requires a shift from volume-based payments as well as structural changes to reimbursements and even impacts how clinical care is provided. A large driver of declining reimbursements is Medicare, which has begun to tie traditional Medicare payments to quality, outcomes, and value through alternative payment models. Financial resources are further stretched as Medicare enrollments are projected to continue to increase as the population ages. Medicare has already achieved its initial milestone of tying 30 percent of all traditional Medicare payments to quality or value through alternative payment models by 2016. This trend is expected to continue as Medicare plans to increase this level to 50 percent by 2018. While these changed approaches are still relatively new and providers and suppliers continue to adapt, this trend has negatively impacted margins on some Medicare business. Health care businesses that rely heavily on Medicare will need to be nimble in adapting their business model in 2017. Some may find that bankruptcy offers appealing options, either in filings or in acquisitions of distressed entities.

Uncertain Future of the Affordable Care Act

With the forthcoming Trump administration, it is likely that there will be a broad effort to roll back the ACA, either in whole or in part. Exactly what impact this will have on profitability for health care providers and suppliers remains to be seen, but any large impact on the current model will certainly send reverberations throughout the market and may cause distress to health care providers (who may have to treat patients who have no coverage) as well as to patients who may have trouble obtaining other coverage. The ability for health care providers to be reimbursed through insurance providers also may decrease in 2017, as several large insurance companies weigh whether to continue to...