Jordan Shields was quoted in the Becker’s Hospital Review article “Troubled Transactions: Why There’s Still Hope for Financially Struggling Hospitals,” which outlined the challenges and possible strategic paths available to a financially compromised independent hospital seeking a partnership. Commenting on transaction volumes specifically, Jordan stated that the number of distressed hospitals looking to carry out a transaction has remained consistent, while the number of financially strong hospitals seeking partners has increased. He stated that although it appears acquirers are becoming pickier when it comes to partnering with a troubled hospital, it does not appear that these sorts of partnerships are on the decline yet.
Jordan stated, “For a distressed hospital, they have two options: Either find a partner, or restructure their debt, often through bankruptcy. We haven’t seen a huge swell in hospital bankruptcies.”
Commenting further on hospital bankruptcies, Jordan added that identifying a partner before filing for bankruptcy gives healthcare providers “a little bit of security” going into the bankruptcy, although the strategy does have risk. “They have a clear idea going into bankruptcy court that there will be someone on the other side to operate the hospital and take control of their assets,” he says. “But there’s risk in that. Once you go into bankruptcy, all bets are off. There’s no guarantee that the bankruptcy judge is going to agree with your plans or that the partner will be there on the other side.”
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