This article explores some current health care financing trends and speculates on what they may portend for work in a health care restructuring professional’s “pipeline.” While there are many kinds of health care enterprises on which to focus, we have chosen two to single out as representing the likeliest restructuring possibilities in the foreseeable future: hospital facilities, systems and networks; and residential facilities that are designed to attract more mature, senior-living populations, generally known as Continuing Care Retirement Communities (CCRCs). Before we analyze current trends in the financing of these businesses, the current state of these two types of health care endeavors needs to be explored to provide an overview of their current travails, concerns that point to restructuring possibilities several years down the road.

Current State of the Hospital Industry -

Let’s start with a brief but rather wide-ranging review of the hospital industry. Five readily discernable trends have bedeviled hospital operations over the past half-decade or so, and all indications are that these conditions will continue for at least that length of time into the future. These five trends include: a steady decline in patient volume; pressure on operating income from bad-debt write-offs, increased charity cases and Medicaid and Medicare underpayments; decreased nonoperating margins from investments and contributions, which have greatly deteriorated since the 2008 fiscal crisis; limited access to capital and financing for both “have” and “have-not” hospitals; and (5) what one of us calls “get big or get out.”

Originally Published in American Bankruptcy Institute in November, 2014.