Economic indicators show increasing distress in health care; while decreasing in other areas of economy
Polsinelli, an Am Law 100 firm, announced today the release of the Polsinelli-TrBk Distress Indices
for the second quarter of 2017.
The Polsinelli-TrBk Distress Indices are the backbone of a research report that uses Chapter 11 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.
“Healthcare continues to see an increasing amount of distress while we are seeing further decoupling as the real estate and chapter 11 indices continue to stabilize,” said Jeremy Johnson, a bankruptcy and restructuring attorney at Polsinelli and one of the authors of the report.
The indices track the increase or decrease in all Chapter 11 filings with over $1 million in assets since the fourth quarter of 2010. This captures a broader picture of distress than is usually available through the public markets, encompassing Main Street to Wall Street. The index value is based on a rolling four-quarter average, which is designed to smooth out the results to give a more accurate view of the filing trends. A high index value reflects increasing financial distress in the economy. The indices further track the asset size and location of Chapter 11 filings.
“The record high in healthcare distress for the second quarter of 2017 reveals the continued pressure on the healthcare services sector,” Johnson said “This is the highest that healthcare distress has measured since we started tracking data in the fourth quarter of 2010. We expect the distress will continue with the significant uncertainty in the market.”
The Chapter 11 Distress Research Index
was 40.90 for the second quarter of 2017. The index decreased since the last period and has increased 6 out of the last 8 quarters. Compared with the same period one year ago, the index is slightly higher.
The Real Estate Distress Research Index
was 25.07 for the second quarter of 2017. This is approximately the same as the last quarter. The Real Estate Index has increased 4 of the last 8 quarters. Compared with the same period one year ago, the index has changed by less than 1 point.
The Healthcare Services Distress Research Index
was 208.33 for the second quarter of 2017. The Health Care Index increased significantly from last quarter, increasing by nearly 87 points. The index has experienced record or near-record highs in 5 of the last 6 quarters. Compared with the same period one year ago, which was the prior high point of the index since the benchmark of the fourth quarter of 2010, the index has increased by 45 points.
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 12.25 percent now, climbing slightly since the last quarter. Healthcare services filings have increased from 1.13 percent in 2010 to 5.76 percent.
To access the full report, and all past analysis, visit distressindex.com