One of the nation’s largest operators of nursing homes filed for bankruptcy this week amid debt defaults and a destabilizing cyberattack that tipped the financially troubled company over the edge.
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Petersen Healthcare filed for Chapter 11 protection in Delaware bankruptcy court Wednesday, citing $295M in debt, according to Reuters. Of that debt, $45M is owed under healthcare facility loans insured by the U.S. Department of Housing and Urban Development.
The Peoria, Illinois-based company, which operates over 90 nursing homes in Illinois, Iowa and Missouri, failed to keep current on payments on those HUD-insured loans, leading 19 of them to be placed into receivership following lawsuits by two lenders, X-Caliber Funding and Capital Funding.
Petersen's bankruptcy declaration follows a series of financial blows in recent years. It was already struggling with unreimbursed Medicaid costs from a 2015-2017 budget impasse in the state of Illinois, Reuters reported. A cyberattack last year on major payer UnitedHealth only worsened its position, causing an investigation and disruption to several of its billing systems.
Now it seeks close to $50M to keep operating through bankruptcy proceedings, subject to court approval, The Wall Street Journal reported. The funds will cover expenses for employees, suppliers and day-to-day operations.
“We will emerge from restructuring as a stronger company with a more flexible capital structure,” Petersen Chief Restructuring Officer David Campbell said in a statement. “This will enable us to continue as a first-choice care provider and a reliable employer for our staff.”
Petersen's bankruptcy filing is at least the third among large nursing home operators over the past year, according to the WSJ.
The Amsterdam at Harborside retirement community and Envision Healthcare are among those that sought bankruptcy protection last year, blaming the rising cost of paying staff and other issues.
Competition for qualified nursing staff has spiked in the wake of the pandemic, and 579 facilities have closed, according to American Health Care Association statistics as of August 2023.
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