Health bankruptcies fell to a hollow of 3 years in the second quarter

Diving brief:

• Health care bankruptcies fell to a three -year hollow in the second quarter of 2025, according to a new Gibbins Advisors report. Only seven companies with at least $ 10 million liabilities filed chapter 11 protections, against 14 during the same period last year.
• The restructuring consulting company predicts that there will be 16% less deposits this year compared to 2024, because health companies and less important service providers declare bankruptcy.
• However, the DIP can be short -lived. Difficult market conditions, including the impacts of Medicaid cuts, could achieve the results of service providers from 2026, potentially stimulating a new wave of bankruptcies, according to Gibbins.

Diving insight:

The results follow two quarters of an increased bankruptcy activity activity, including 19 deposits during the fourth quarter of 2024 and 17 deposits in the first quarter of 2025. The bankruptcies of the practice of the hospital and the doctor were raised during this period, with eight and six companies depositing respectively, according to the report.

However, in the second quarter, there was no bankruptcy file for suppliers, according to the analysis of Gibbins.

Instead, the lion’s share of the seven health care deposits came from pharmaceutical companies, with five bankruptcy tables during the quarter. A medical supply company and a higher care company also declared bankruptcy during the period.

However, the report is not a reason for optimism concerning the financial health of the sector, said Gibbins analysts. Providers in particular have been hardly affected by policy changes in Washington, including the introduction of prices on critical supplies and the general volatility of the market. The imminent Medicaid cuts are likely to issue future problems.

“The unprecedented financing cuts in the One Big Beautiful Bill law are deeply disturbing for the future of health care,” said Clare Moylan, director at Gibbins Advisors, in a press release. “Hospitals serving vulnerable communities – in particular those who have high Medicaid populations and depend on additional payments – risk the greatest risk.”

President Donald Trump signed the “Big Beautiful Bill Act” on July 4, following a significant decline in hospital lobbyists and non -partisan analysts.

Sprawling legislation reduces about $ 900 billion in Medicaid over a decade, in part by creating work requirements, which will start at the end of 2026.

Ten million additional people should not be provided by 2034 under the law, according to an analysis published last month by the Congressional Budget Office.

Hospitals have expressed their concern that this weighs on their results, as unpaid care costs increase. Meanwhile, tax credits for improved premiums should also expire at the end of 2025, which allowed 5.1 million people to lose coverage if the legislators do not renew them, according to the CBO.

The legislation also limits the taxes of service providers from 2027 – a huge ding for suppliers’ income, in particular in states of expansion.

Providers will face these challenges when they take care of the problems of a year, including staff shortages, disputes and volatile markets.

The healthier health companies will be able to resist the storm will critically examine their waste budgets, will adjust the workflows to take advantage of automation or outsourcing and focus on effective management of the supply chain, said Gibbins.