According to the latest Polsinelli-TrBK Distress Indices Report, bankruptcy filings from medical facilities for the elderly surged, shaping the financial distress of the United States in the fourth quarter of 2021...
The report reports that when healthcare begins to return to pre-pandemic numbers, organizations focused on the lives of older people, independent / supported living communities, and skilled nursing facilities are important for healthcare bankruptcy filings. Shows how to represent the part.
These medical facilities are addressing lower patient censuses, higher operating costs, and greater pressure on labor and labor costs.
Jeremy Johnson, a bankruptcy and restructuring lawyer and shareholder of Porcineri, co-author of the report, said:
“We haven’t seen the end of COVID-19 yet. The massive federal support that has highlighted the facility will soon end.”
Financial pain beyond the lives of the elderly
Kevin Giusti, Managing Director of Walker & Dunlop, which specializes in financing housing for the elderly, told GlobeSt.com that many segments of the economic and commercial real estate asset class (especially retail, office and hospitality) are COVID-19. He says he experienced financial distress due to. ..
“I don’t think bankruptcy is unique to senior housing,” he said. “In fact, during the pandemic, I think elderly housing and skilled care facilities worked well. It emphasized the importance of these facilities to provide care to vulnerable populations within our community. “
Justy is very positive for senior homeowners over the next five to ten years, given the lack of housing construction projects for the elderly during a pandemic and the continued aging of the country’s demographics. Said it would be.
Resilient life plan community
In the current environment, there is clearly some pain, but some of the senior living subsectors were superior to others, says Michael Lincoln, Principal of GreenRock Capital.
“The life plan community is fairly resilient, but stand-alone, single-site care facilities are most affected by the pandemic,” he told GlobeSt.com. “Providers continue to seek scale and scale to improve operational efficiency and expect to further increase the number of alliances, acquisitions and mergers.
“It’s just a few of what we have and what we don’t have. Providers with stronger balance sheets raise funds for reinvestment, expansion and relocation, making them more relevant to knowledgeable consumers. I see you trying to provide a service.
“There may be no place for providers to hide from labor and talent pressures, but we’re still bullish. Over 75 growing, regardless of where the senior housing provider is located in the care continuum. Relentless demand from demographics will continue to create a tailwind for the senior housing industry. “
Opportunity to buy
Another point to consider is that few lenders want to undertake the operation of housing facilities for the needy elderly.
Mike Gerbers, Managing Director of JLL, said: Capital Markets told GlobeSt.com. “Since these communities run businesses that provide 24-hour care, there are few applications for Chapter 11.
“Many investors are looking for bad properties to buy. I like this value model because they buy these communities much less than replacement costs and have very good demographic trends. “
Adding financial pressure from infrastructure replacement
However, the cost pressures on these facilities cannot be overlooked. Partner Mark R. Ustin, Farrell Fritz, PC, a health care policy expert at the company, said COVID-19 exacerbated the previous trend of long-term care in facilities where occupancy is already declining as a result of the elderly. I’m talking to com. I like to get older at home.
“At the same time, the advent of managed care and the need to replace older infrastructure has increased costs and reduced redemptions,” says Ustin. “COVID, like other Americans, is the salary cost required to maintain staff who often had to leave the workforce due to increased demand at home from out-of-school children. In addition to the increase in, there was also a more general desire not to work in the environment, which was often a hotbed for the transmission of the disease. “
“In addition, the additional cost of new legislative and regulatory obligations in several places aimed at correcting the recognized shortcomings of service delivery (eg, minimum personnel requirements, new equipment obligations, or (Through the profit cap in the commercial space), and you have a recipe for a financial disaster. “
Wise operators will use new technologies to help care for residents and address ongoing labor shortages, Solterra Companies Chief Marketing Officer Peter DeMangus told GlobeSt.com. However, he admitted that these staff shortages are likely to remain a challenge for the foreseeable future.
Ustin said institutional care providers will need to actively reassess their service delivery models and focus more on private alternative medicine to subsidize inadequate Medicaid income. And they need to work closely with state policy makers and regulators to bring new ideas to fruition. “
Details from the Porcineri Report
Other important updates to the report are:
- The Chapter 11 Pain Survey Index was 39.60 in the fourth quarter of 2021. The Chapter 11 index was down 9 points from the previous quarter. The index has decreased by more than 47 points compared to the same period a year ago, and by more than 60% compared to the benchmark period in the fourth quarter of 2010. This is the third consecutive quarter in which the Chapter 11 Pain Survey Index recorded a decline.
- The Real Estate Distress Survey Index for the fourth quarter of 2021 was 20.17. The real estate index has fallen by more than one point from the previous quarter. The index is down 8 points from the same period a year ago and down 80% compared to the benchmark period in the fourth quarter of 2010.
- The Healthcare Services Distress Survey Index for the fourth quarter of 2021 was 196.67. The Healthcare Index increased 108 points from the previous quarter. The index has decreased by more than 220 points compared to the same period a year ago and has increased by 96% compared to the benchmark period in the fourth quarter of 2010.
