Physician practice bankruptcy filings hit a six-year high in 2024, according to a report on Chapter 11 bankruptcy filings from healthcare restructuring advisory firm Gibbins Advisors.
Here are five major healthcare bankruptcies in the last year affecting physicians:
1. Physician staffing firm NES Health filed for Chapter 7 bankruptcy on Feb. 21. NES announced plans to cease operations in November, citing financial challenges. Reports indicate that the company’s financial struggles left emergency department physicians at multiple hospitals unpaid for a period of time.
NES Health filed for bankruptcy in the U.S. Bankruptcy Court for the Southern District of Illinois, with estimated assets between $1 million and $10 million and liabilities ranging from $10 million to $50 million. The company, founded by Allan Rappaport, MD, a California-based radiation oncologist, listed hundreds of creditors, including hospitals and contract physicians.
2. In January, Los Angeles-based Prospect Medical Holdings, a private equity-backed company with a portfolio of more than 11,000 physicians, filed for Chapter 11 protection. The company, which operates facilities in California, Pennsylvania, Rhode Island and Connecticut, stated in a news release that it will continue normal operations despite listing over $400 million in debt.
This week, Upland, Pa.-based Crozer Health, owned by Prospect Medical Holdings, announced it will remain open beyond March 14, the day Prospect had set for its closing, due to last-minute funding from the Foundation for Delaware County.
3. In December, Miami-based CareMax, a healthcare provider focused on older adults, sought Chapter 11 protection Nov. 17 and has entered into an agreement with Revere Medical to sell its management services organization and core clinic business assets. The transactions are part of a pre-arranged Chapter 11 restructuring plan which is fully supported by the company’s secured lenders.
4. In November, Bradenton, Fla.-based MCR Health, a nonprofit medical group, sought Chapter 11 protection. Court documents filed in Florida revealed MCR has around $14.4 million in debt, consisting of around $12 million in loans and $2.4 million to unsecured creditors, the publication reported.
According to several WARN notices, the group has laid off a total of 47 employees, including a pain management physician, an orthopedics physician, two x-ray technicians, 17 patient engagement specialists, a senior staff accountant, 17 authorization and referral specialists and a director of musculoskeletal operations.
5. Dallas-based Steward Health Care, which operated 31 hospitals in eight states at the start of the year, filed for bankruptcy in May. The health system closed or sold its hospitals as part of its restructuring efforts.
Several health systems stepped in to acquire Steward’s hospitals amid bankruptcy proceedings. In August, Steward entered into a definitive agreement to sell its 1,700-physician group to Nashville, Tenn.-based Rural Healthcare Group, part of PE firm Kinderhook Industries, for $245 million.
