The Tax Cuts and Jobs Act of 2017 (TCJA), signed by President Trump on December 22, 2017, has potential implications for nearly every segment of the healthcare industry. For healthcare providers, elements of the TCJA may increase pressure on operating profitability, which may, in turn, lead to an increase in restructuring, workout, and merger and acquisition activity.

The key financial impacts on healthcare providers are expected to be uneven and may also depend on experiments taking place at the state level, where some legislators are contemplating local implementation of the...

The public focus on making healthcare better, more cost effective, and increasingly convenient has resulted in a number of disruptive forces challenging organizations. A small disruption in profitability or timing of cash flows can have large ramifications, especially for companies that have used low interest rates to take on large debt levels. Leveraged balance sheets coupled with disruptive industry forces can leave organizations overwhelmed by debt levels, drained of financial resources and unable to adequately invest in opportunities to improve competitiveness.

In response,...

A law firm just filed a Chapter 11 case in U.S. Bankruptcy Court for the District of Delaware. That can be a stressful time, but the attorneys are experienced and understand the protocols and related procedures. They did the exact same thing as they’d done with prior cases. This time, however, they quickly discovered that simply by filing a routine court document they’ve inadvertently breached the privacy of millions of creditors, parties in interest, or individuals with whom the debtor has done business—and, as a consequence, violated applicable federal law.

While this may sound...

Healthcare’s version of the Industrial Revolution is well underway. 

Over the last decade, five revolutionary forces1 have taken industry stakeholders by storm: the convergence of genetic and computer codes, advancements in mobile technologies, a negative return on capital, the integration of supply chains as the norm, and patient care that is moving away from hospitals and doctors’ offices. 

Now, three foundational shifts are taking place at the same time: the moves from mandates to choice, regulation to competition, and subsidies to actuarial soundness. In this...

Picture this scenario: a 300-unit regional hospital in Ruraltown, USA, derives a significant amount of its revenue through its participation in government-sponsored Medicare and Medicaid programs and the hospital’s entitlement to prospective reimbursements from the government. Operations have been stagnant year-over-year for the past five years. Management tells the board that there can be no hiccup or event affecting the hospital’s revenue stream, or hospital operations will no longer be viable.

The hospital has had a rough time recruiting doctors because of the size and geographic...

Price gouging, treatment rationing, and data falsification are signs that the Anthropocene Epoch has arrived in healthcare and extinction lies ahead for those that cannot adapt. As a result of revolutionary changes in the reimbursement system that the Center for Medicare and Medicaid Services (CMS) is implementing, the U.S. healthcare system is in a process of change akin to the Industrial Revolution that began 200 years ago. As providers, lenders, patients, payers, consumers, and investors watch the old world of fee for service disappear and a new world of value-based purchasing take hold...

“It’s only when the tide goes out that you learn who has been swimming naked.” —Warren Buffet

It is no secret the healthcare industry has been experiencing an unprecedented tidal wave of consolidation over the past several years. On its surface, the healthcare industry appears to be generally profitable, with massive mergers creating powerful integrated providers designed to capitalize on the current regulatory and reimbursement environment. But this merger activity can often disguise powerful undercurrents of financial distress. 

According to the...

Healthcare reform has dramatically changed the manner in which health systems deliver care to patients and how they are reimbursed for services. As hospital boards review their institutions’ competitive positions in a post-healthcare reform world, particularly those overseeing community hospitals, many decide to explore a sale to a strategic partner.

Deciding to sell a community hospital will be the most scrutinized decision a board makes. Engaging a financial advisor to perform a valuation or fairness opinion is a worthwhile exercise as the board evaluates various alternatives and...

Although many of the provisions of the Patient Protection and Affordable Care Act, popularly known as “Obamacare,” did not take effect until several years after its March 2010 enactment, supporters and opponents would agree that Obamacare enacted sweeping and significant changes not only to the healthcare industry, but also to the structure of the economy generally.

Like any major economic statute, Obamacare’s enactment created challenges and opportunities for businesses and turnaround managers. This article provides a brief survey of some of the challenges and opportunities as they...

When turnaround professionals take on the challenges of a financially distressed client, the first issue they often must address involves costs related to human resources. Chief among them are expenses for the company’s employees’ health benefits.

In the last several years drastic changes have occurred within all aspects of the healthcare industry. “Obamacare” changed the entire landscape of the medical industry, everything from how insurance companies engaged their customers to how medical providers delivered care and were reimbursed for it. The cost to provide healthcare for small...