Polsinelli Releases 4th Quarter 2017 Polsinelli-TrBk Distress Indices
Healthcare distress continues to increase; signaling more uncertainty for healthcare companies
Polsinelli, an Am Law 100 firm, released today the Polsinelli-TrBk Distress Indices
for the fourth quarter of 2017.
The Polsinelli-TrBk Distress Indices are the backbone of a research report that uses bankruptcy filing data as a proxy for measuring financial distress in the overall U.S. economy, as well as breakdowns of distress in the real estate and the health care services sectors.
“What the Polsinelli/TrollerBk Distress Indices show is not so much a spike in healthcare distress, but a sustained increase in healthcare distress over the past year,” said Jeremy Johnson
, a bankruptcy and restructuring attorney at Polsinelli and one of the authors of the report. “The indices measure on a rolling four quarter basis, so this isn’t a quarter by quarter snapshot, but shows a sustained increase over the past year. The distress has various causes, but tort liability and reimbursement issues continue to drive healthcare providers into bankruptcy to seek alternatives.”
The current political climate is also helping drive distress, Johnson said. “Another factor we attribute to the increased distress for healthcare companies is the political uncertainty on healthcare policy in Washington D.C. at the moment. The uncertainty over what will happen to the remaining pieces of the Affordable Care Act as well as just the entire political climate for healthcare, seem to be driving up healthcare distress.”
The Chapter 11 Distress Research Index was 48.95 for the fourth quarter of 2017. The Chapter 11 Index increased more than 6 points since the last quarter and has increased 5 of the last 8 quarters. Compared with the same period one year ago, the index has remained approximately the same and compared with the benchmark period of the fourth quarter of 2010, it is down more than 51 percent.
The Real Estate Distress Research Index was 32.89 for the fourth quarter of 2017. The Real Estate Index increased more than 7 points since the last quarter and has increased 5 of the last 8 quarters. Compared with the same period one year ago, the index has increased almost 7 points and compared with the benchmark period, it is down more than 68 percent.
The Health Care Services Distress Research Index was 281.67 for the fourth quarter of 2017. The Health Care Index increased 58 points from last quarter. The index has experienced record or near-record highs in 6 of the last 7 quarters. Compared with the same period one year ago, the index has increased more than 131 points. Compared with the benchmark period of the fourth quarter of 2010, the index is up more than 181 percent.
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 13.42 percent now, decreasing slightly since the last quarter. Health Care services filings have increased from 1.13 percent in 2010 to 6.50 percent, an increase from last quarter.
The Polsinelli-TrBK Distress Indices track the increase or decrease in all Chapter 11 filings with more than $1 million in assets since the fourth quarter of 2010. Unlike the public markets, the Polsinelli-TrBK Distress Indices include both public and private companies, creating a broader economic view and one which may show developing trends on Main Street before they appear on Wall Street.
To access the full report, included graphs and all past analysis, visit https://www.distressindex.com