A Guide to Shepherding Healthcare Providers Through Bankruptcy Proceedings

The 21st century has handed healthcare providers significant financial and economic challenges. Payers, public and private, are balking at paying the ever increasing cost of modern health care and pushing providers to transition from fee-for-service to value-based revenue models. Medical care is increasingly relocating from hospitals to other venues (e.g., ambulatory surgery centers, urgent care centers, community-based programs), negatively impacting hospital revenues, and for-profit entities are moving into the healthcare industry - long the domain of non-profit entities.

The drive under HIPAA and the HITECH Act to digitize health records has increased the cost and complexity of providing healthcare, and cash-strapped state and local governmental entities are challenging the property tax exemptions long enjoyed by non-profit healthcare providers. At the Federal level, the Affordable Care Act now requires non-profit healthcare providers to demonstrate the benefits they provide to the community as a condition to retaining their Federal tax exemptions, and the precarious state of the Affordable Care Act has added uncertainty to challenges to healthcare providers and health insurers. Consequently, healthcare bankruptcies spiked during the first half of 2017, and the challenges continue.

Special rules impact healthcare bankruptcies. These rules address (i) the eligibility for bankruptcy relief and a discharge of debts; (ii) jurisdiction over Medicare and Medicaid disputes; (iii) the treatment of Medicare and Medicaid provider agreements - the lifeblood of most healthcare providers; (iv) asset sales and divestitures, particularly when a non-profit provider is being converted to a for-profit provider; (v) the role of the Patient Care Ombudsman; (vi) the disposition of patient records; (vii) hospital closings; and (viii) the impact of federal (e.g., antitrust) and state laws (e.g., Certificate of Need laws) that regulate healthcare providers outside of the bankruptcy context.

This program, taught by David Crapo, Of Counsel to Gibbons P.C. with extensive experience in bankruptcy matters and a focus on the representation of healthcare providers, will address the impact of those special rules on healthcare provider's bankruptcy proceedings, and suggest best practices to consider to achieve the best result in bankruptcy for a financially troubled provider.

1. Review the laws and regulations that impact a healthcare provider's bankruptcy
2. Discuss how those laws apply in specific bankruptcy contexts
3. Identify best practices to follow in shepherding a healthcare provider through bankruptcy