Public hospitals likely to see bankruptcies this year

Given the pressures imposed by this recession, more than a few of the nation's public hospitals will end up in bankruptcy--with some doubtless closing or changing hands at the end of the process. That's the argument being made, at least, by George Pillari, a managing director at restructuring firm Alvarez & Marsal. He notes that publicly-funded hospitals have been a major component of huge financial losses that cities and counties across America have seen of late.

That's true, in part, for reasons that won't surprise any FierceHealthcare reader: because they rely disproportionately on low-paying Medicaid coverage. As if that weren't insulting enough, Medicaid has been paying even less of late as state budgets have suffered during the economic downturn.

Pillari is predicting that private investors or religious orders may take these public hospitals over, a step made easier by a Chapter 9 bankruptcy filing. Under Chapter 9 bankruptcies, municipalities have a framework for selling their assets to pay off their debts, he notes.

To learn more about public hospitals' plight:
- read this Wall Street Journal piece

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