Tenn. Hospital Bankruptcy May Be the First of Many

An April 15 article in Law360, “Tenn. Hospital Bankruptcy May Be the First of Many,” discusses the impact of the coronavirus pandemic on the financial well-being of U.S. hospitals and health systems. Rivkin Radler’s James Lagios, Robert Iseman and Stuart Gordon collaborated on the article.

The article points out that in recent years, U.S. hospitals have faced increasing financial challenges, being pressured to reduce operating costs while assuming greater financial risk. At the same time, technological developments in medicine have allowed many high-margin medical services to be delivered in non-hospital settings, depriving hospitals of significant revenue streams. This combination of factors made for an extremely difficult economic environment for hospitals, even before the COVID outbreak forced them to delay nearly all of the elective surgical procedures upon which they depend for revenues.

Jim, Bob and Stu conclude, “Given its extraordinary financial impact on our economy, the coronavirus pandemic should be a catalyst for significant structural changes in the American health care industry, particularly with respect to our struggling hospitals.”