News Releases
May 22, 2017
Polsinelli Announces Release of 1st Quarter 2017 Polsinelli-TrBk Distress Indices

Economic indicators show continuing distress in health care


Polsinelli announced today the release of the Polsinelli-TrBk Distress Indices for the first quarter of 2017.

The Polsinelli-TrBk Distress Indices are the backbone of a research report that use Chapter 11 bankruptcy filing data as a proxy for measuring financial distress in the overall U.S. economy, as well as breakdowns of financial distress in the real estate and the health care services sectors.

"Although financial distress appears to be stabilizing in the general Chapter 11 and real estate markets, healthcare continues to experience significant distress,” said Jeremy R. Johnson, a bankruptcy and restructuring attorney at Polsinelli and one of the authors of the report.

The indices are contrarian indicators of economic performance, so that a high index value reflects increasing financial distress in the economy. The indices track the increase or decrease in comparative Chapter 11 filings for prior quarters and years, based on a rolling four-quarter average. The indices further track the asset size and location of Chapter 11 filings.

“Distress in healthcare is 21 percent over the benchmark levels and it appears that more distress can be expected,” Johnson said. “The current administration's efforts do not bode well for improving the health care markets primarily because of efforts to limit the continued implementation of the Affordable Health Care Act (Obamacare), and enact some form of the American Health Care Act (Trumpcare) with substantially lower funding levels of Medicaid."

The Chapter 11 Distress Research Index
registers at 45.85 for the first quarter of 2017. The index decreased slightly since the last period and has increased six out of the last eight quarters. Compared with the same period one year ago, the index is slightly higher. Case filing numbers measured in the Polsinelli|TrBK Chapter 11 Distress Research Index have shown significant volatility since the benchmark period of the fourth quarter of 2010. During that period, the number of filings declined 12 times compared to the prior quarter, and increased 13 times compared to the prior quarter. The volume of declines far exceeded any increases in filings, however.

The Real Estate Distress Research Index registers at 25.54 for the first quarter of 2017. This is approximately the same as the last quarter. The Real Estate Index has increased four of the last eight quarters. Compared with the same period one year ago, the index has changed by less than 1 point. Similar to the Chapter 11 Distress Research Index, case filings measured in the Real Estate Distress Research Index show significant volatility quarter-on-quarter. Since the benchmark period of the fourth quarter of 2010, filing numbers declined 13 times compared to the prior quarter, and climbed 12 times compared to the prior quarter. The volume of declines far exceeded any increases in filings.

The Health Care Services Distress Research Index registers at 121.67 for the first quarter of 2017. After four consecutive quarters of record highs, the index decreased by almost 29 points from the prior quarter. Despite this drop from the prior quarter, the index is remains 21.67 percent above the benchmark in the fourth quarter of 2010. Case filing numbers measured in the Healthcare Services Distress Research Index show similar volatility to the other Polsinelli|TrBK Distress Indices when comparing only whether the number is greater or less. Since the benchmark period of the fourth quarter of 2010, filing numbers declined 13 times compared to the prior quarter, and increased 12 times compared to the prior quarter similar to the other indices. For the Healthcare Services Index the volume of increased filings has generally outstripped declines, resulting in an index value that is 21.67 percent higher than the benchmark period of the fourth quarter of 2010.

On a trailing four-quarter average, the percentage of real estate filings among all index-measured Chapter 11 filings has decreased from 19.98 percent in 2010 to 11.13 percent now, climbing slightly since the last quarter. Healthcare services filings have increased from 1.13 percent in 2010 to 3.00 percent.

To access the full report, and all past analysis, visit distressindex.com.