Podcast - Rising Chapter 11 Bankruptcies in Healthcare

Morgan Ribeiro: With that, I want to introduce you to today's guest, Clare Moylan and Jim Davis are with Gibbins Advisors, a healthcare firm providing restructuring, turnaround, and other financial advisory services. And Tyler Layne, a partner in Holland & Knight's Restructuring practice. Thank you all for joining me today.

Thank you. Nice to be here. Absolutely. So before we jump into the meat of our discussion and definitely want to learn more about the findings from your report, I first wanted to give everybody an opportunity to learn more about yourselves and your firm. So Clare, I'll start with you.

Clare Moylan: Sure. I'm a co-founder and principal of a firm, Gibbins Advisors.

As you can probably tell, and you know me already, but for the audience, I'm from the deep, deep South, as in Southern Hemisphere Australia. I've worked in restructuring my entire career and specialized in healthcare for about the last 15 years at Gibbins Advisor. That we specialize in restructuring and consulting and interim management working almost exclusively in healthcare.

Our team brings together people with professional services, backgrounds, and restructuring skills, but also industry operators at C-level executives. And I'm joined today by Jim Davis. Who fits that description? Typically we got involved where there's a major problem to solve outside of the business as usual for providers or the organization's not performing to expectations.

So our work really focuses on when things aren't going as well as you'd hoped, right through to managing crisis situations. So, yeah, we're not really afraid of a hairy situation. We get stuck in. I'll hand it over to Jim.

Jim Davis: Oh, thank you, Clare. I appreciate it. Yeah. You know, I'm fortunate to be joining Gibbins Advisors after having a relationship with him for quite some time, and I do come from a healthcare operations background from the C level, from being a CEO of hospitals.

But also running through COO, CNO, I have a clinical background. That's how I started my career in healthcare and trauma and burn and the surgical specialties, which I think gives me a unique perspective when dealing with the challenges that hospitals and physicians, and large physician practices face today in healthcare, which is certainly evolving and continues to be very challenging.

My focus is typically on strategic advisory improvement and execution, as well as operational management assessment. And excellence, trying to optimize the operations of the healthcare business at hand, whether that's on the inpatient acute care side or the outpatient services arena. And then, of course, looking at where is the facility at financially and how can we merge together optimal financial performance with optimal clinical performance.

So thanks for having me.

Morgan Ribeiro: Awesome. And Tyler?

Tyler Layne: And I'm Tyler Layne. I'm a restructuring partner at Holland & Knight focusing on healthcare restructurings. We represent mostly healthcare providers, hospitals, skilled nursing facilities, surgery centers, and their lenders as well as private equity sponsors, and are also active in the physician practice management space and the medical equipment space.

Morgan Ribeiro: Excellent. Well, thank you for those quick introductions. I think given those introductions in the background that you've provided, it's easy for our listeners to see now just the breadth of healthcare knowledge and the fact that you all are living and breathing this every day.

And it's certainly a complex space, particularly given the amount of stress that this industry has been facing, particularly since Covid. So would love to jump in. And Clare, just to get us started, can you tell us more about what drove you all to produce this report? Provide us with a couple of bullet points just about the major findings from your report.

Clare Moylan: Sure. So what we started this initiative last year to track healthcare-related chapter 11 bankruptcy filings, just to monitor over the past several years, and then looking quarterly how the number of filings has compared, and looking at trends by sub-sector within healthcare. So we focused just on the larger cases where companies had liabilities of over 10 million, and what we found was that through the end of last year, 2022, healthcare bankruptcy filings were 84percent higher than they were in 2021. If we look by sub-sector, we can see that the senior care sector and pharmaceutical sectors comprised about half of those healthcare cases.

Just looking through 2022. The amount of activity in bankruptcies really accelerated pretty dramatically through the year, such that the number of filings in Q4 were almost three times the number of filings in Q1. This was surprising to us, but I don't want to cause alarm here. We're not talking about a flood of bankruptcies in 2021.

There was a bit of a lull in bankruptcies, and we'll speak to some of the factors that were driving that. What we saw in 2022 was then effectively a return to the pre-pandemic levels of bankruptcy filings for most sub-sectors within healthcare except hospitals. In hospitals, there were only two bankruptcy filings in the scope that we looked at in 2022 compared to 10, filed in 2019.

One of those cases was pipeline health with seven hospitals, but there certainly wasn't the level of bankruptcy filings in 22 as there had been in previous years.

Morgan Ribeiro: Thank you. That was a very good summary of a pretty robust report. We're going to be actually recording a separate podcast with some of your colleagues to talk more specifically about the pharmaceutical space and some of the activity that we're seeing there.

So for this podcast, really want to focus on the hospital space. You note that only two hospital bankruptcy cases were filed in 2022 compared to 10 in 2019. Jim, maybe you can kick us off and explain the drivers for that lower number of bankruptcies. Frankly, that's honestly a bit surprising to me, and so would love to hear sort of what your take is on that and the meaning behind those numbers.

Jim Davis: Most certainly. I think there was probably a general consensus as we entered the pandemic that there was going to be a significant number of bankruptcies and this expedited pressure upon hospitals that would initiate the start of these filings. And really what we saw happen was both at the federal and state level, the government step in and provide additional financial incentives, not only in regards to retaining staff and.

At the hospital level, but also supporting programs for the care of those that came in with Covid to bolster kind of the overall acute healthcare system as we as a country dealt with the pandemic. And in addition to that, we saw lenders, grant extensions, waivers, and really accommodate the challenges that these hospitals were facing during this time to prevent any acute financial episode that would force them into bankruptcy.

Morgan Ribeiro: Thank you. So I read that there were 19 hospital closures, bankruptcies, or announced plans. So that captures some of that bankruptcies, but also just closures and other announced plans to close throughout 2022. So while the number of bankruptcies has decreased since 2019, I'm curious if that's really a good indicator of the pressures that hospitals are under right now.

The player.

Clare Moylan: Yeah, you are right. Like the number of bankruptcy filings is definitely a lag indicator, so it's not a lead indicator of distress that's necessarily currently being felt, and the number of closures is another indicator and another lag indicator of distress. What I want to talk to, Now is why are some of those closures not filing bankruptcy?

And it goes back years that the transformation in healthcare as a whole has been happening for a long time. Where you've got a population shift moving away from rural areas and new clinical technology in models of care, which is moving care out of hospitals and into outpatient and community settings. So it's changing the dynamic for hospitals pretty materially in how they deliver.

Rural areas in particular, face population decline. They've got an aging infrastructure and an aging population. And what's happened over decades is that a lot of these community and rural hospitals have been picked up by strategic health systems. They've acquired them, but there's a lot of them that have also been left behind, and some of them have been picked up, but they haven't worked.

So we're seeing a lot of hospital closures in these situations because the hospital's just not viable and there are no potential buyers or financial backers that are willing to keep it going. So you might not see these hospitals file bankruptcy, although they're closing for two key reasons. So in some situations, if the hospital's owned by a larger health system, they don't necessarily need to file bankruptcy because got the financial backing of the system so it's not insolvent, it just becomes a closed facility. And that health system has, in most cases, got some other model of care to be able to continue to provide access to healthcare for those communities that they service. But the other aspect is If it's not owned by a large health system, that Chapter 11 bankruptcy, and that's what we've been tracking.

It's really a tool to help a troubled business continue to see the light of day, either through a reorganization of its capital structure or facilitating a sale of the business, and that buyer is going to bring fresh capital know-how, or a strategy that could make it work. If the hospital's closing and there's no buyer, you won't always see a Chapter 11 filing unless there's valuable.

Or complex creditor claims because it's just not the right path to take. It's not the right tool to take in those situations. Back to the topic that you started with around how do we know whether the indicators of distress are right? We look at closures as Right looking at bankruptcies, but they're quite long lag indicators.

Other indicators I'd recommend the audience look at which we use is looking at the big rating agencies publish reports with the sector. So, for example, s and p Global in January 2023 revised its outlook for the not-for-profit acute healthcare sector from stable, uh, in 2022 to negative for 2023. Fitch and Moody's also have similar ratings assessments, so those are a culmination of a huge amount of analytics that they do on individual providers and collate that interceptor reports, and they look at current and projected performance. So that's really helpful to get an outlook. We also look at a report called the National Hospital Flash Report that Kaufman Hall provides on a monthly basis that's compiled from analysis of more than 900 hospitals across the country within a month.

So it's quite current and they aggregate into key financial metrics around hospitals, and that's also a very useful indicator. And in that report for 2022, they noted that last year was the worst financial year since the start of the pandemic with almost half of the hospitals finishing the year with a negative margin.

So there's definitely, although there's only two bankruptcy filings last year, it's definitely not an indicator that there's no distress. There is certainly a lot of financial distress in the market right now.

Morgan Ribeiro: I think that is a good segue into my next question, which was around, even though the lower number of bankruptcies, we've spent a lot of time on this series talking about the pressures that hospitals face and I'd love to get your perspective because I think there's sort of these current and recent.

Pressures that hospitals have faced and what we can anticipate coming over the next 12 to 18 months. So, Clare, Jim, I'd love your thoughts on, you know, if you were going to say these are the top challenges or pressures that hospitals face currently, and what's to come. Would love your thoughts on that.

Jim Davis: Yeah, no thanks.

Morgan. I think obviously inflation, right? It's top of everyone's list, not just in healthcare, had a significant impact on healthcare staffing. We talked about that a little bit earlier, but specifically in nursing, there has been a nursing shortage for several years and all. Indications point us in the direction that's going to continue.

The replacements for the aging nurse population and the retirements that are happening and are still to come. We do not have individuals in school coming out of school that are going to replace those nurses. So that's going to continue to impact the hospital's ability to provide care, not only in the near term but in the long.

Labor cost for hospitals has increased significantly over the last couple of years, and we see not only because of the nurse shortage but the shortage of other individuals working at hospitals. That's going to continue and the current. Reimbursement and future increase in reimbursement is not going to accommodate for that increase in cost that the hospitals will have to bear and certainly, supply chain issues come into play.

Not only the cost of purchasing the goods, the hospital needs to provide the care. That they provide, but also compete with larger systems. You know, these singular hospitals, the smaller systems have to compete with the larger systems for the same goods that they need to provide that care, and that has become much more difficult, and we do not see that changing significantly in the near term.

And obviously, cause of the structure of healthcare in the United States, passing on those costs is part to do. And so all of these pressures on these hospitals, it becomes very difficult to accommodate from just generating more revenue, and we expect that to continue.

Clare Moylan: I'd also add to that a lot of the larger systems have balance sheets with invested assets in the markets and the continued performance of the stock market 3 22 and into this year.

I don't think anyone's really expecting a rapid bounce back in performance. So where those systems rely on non-operating income to come from those invested returns, they may not have that expectation for this year. And if that's what helps to keep you as a bit of a lifeline, you might not have that this year.

The challenges are going to continue.

Tyler Layne: And I’d like to echo that, the effect on smaller systems, the trickle-down effect that has is a lot of the bigger systems built up war chests through Covid. Either their investments or just the cash grants and things that they were receiving that have really buoyed them over the past couple of years.

But as they start to have to get more conservative. That has an effect on the smaller systems because the bigger systems aren't in an inquisitive mood. They're not saying we need to go out and grow a lot. They're very cognizant of the fact that it is difficult to run a hospital in the black, and it's just as difficult for them as it is for the smaller systems.

It's just that they have more resources to do it. And so when you talk about options for either standalone hospitals or smaller systems, That's one option that I think has led to actual bankruptcy filings not being as common as the playbook used to be. Well, we'll file for bankruptcy and somebody will gobble us up, and that's not really a sure thing in the playbook anymore.

And I would also just note the impact of reimbursement rates. If you talk to a hospital board in 2019, their big issue would be reimbursement rates aren't keeping up with expenses. Now that you're in 2023. Their big issue is reimbursement rates. Don't keep up with expenses. And oh by the way, everything's three times as expensive as it was, if not more.

And so I think you're going to see sort of a bigger have not situation in states where there's been Medicaid expansion. For instance, South Dakota, North Carolina are moving that way. And so I think you're going to see a lot more stability in those states as opposed to states where you have high uninsured populations, especially in rural areas, and you don't have Medicaid expansion, sort of backstopping those higher costs.

Morgan Ribeiro: So Tyler, you're talking about Medicaid expansion and I know I had that on my list for us to elaborate on that. I mean, you look at a state like Tennessee, where there's been a number of hospital closures and there are potentially more on the horizon, and there continues to be conversations at the state level about do we expand Medicaid or not, and.

Some could argue that if we had just expanded Medicaid, all these problems would be solved. And I know that's a podcast onto itself, but anything else that you would add to that conversation around reimbursement and with expenses going up even more? I think there's even more of a need in a state like Tennessee to accept those dollars.

Even just to keep the hospitals afloat at this point.

Tyler Layne: I think that it's overly simplistic to say that Medicaid expansion solves all your problems, but at the same time, I think it's important to think about these smaller rural hospitals and smaller rural health systems and urban safety net hospitals as well.

The margins that they operate on are so thin already that it's sort of in the every little bit helps category in terms of inflows of cash and Medicaid expansion. Not a small inflow, and so I think that will be an effective lifeline for a lot of hospitals and other healthcare providers in states in which expansion is in the offing in 23 or 24.

Morgan Ribeiro: Great. My next question was really around kind of what to expect over the next 12 to 18 months. It seems like we've covered a lot of that and Tyler agreed with you just on, the fact. So much emphasis and so much attention has been put on, okay, this post-pandemic world and what the pandemic did to hospitals and the pressures that they've been under since then.

But so much of this existed before, and even if you take the pandemic out of it and the labor shortages and you know, everything that resulted just with inflation and things costing three times more what they used to cost, some might factor supplies into that, some might factor labor into that, but all of those things combined, I think it's just a continuation of the pre-pandemic.

Macroeconomic trends that continue on. And even if we were in 2019 and the conversations that we were having with hospitals then, I mean, a lot of those points remain the same regardless. And this will continue to force changes to the care delivery model. Clare, you mentioned the Kaufman Hall report.

They released an annual report. Taking a look back at 2022 in January, and the report stated that despite the end of the year, there was this slight upswing in performance that approximately half of US hospitals finished 2022 with a negative margin. As growth and expenses outpaced revenue increases. So these losses will not only prompt consolidations and layoffs but also flood surviving hospitals with more patients when they're already at capacity.

So any reaction to those findings?

Clare Moylan: Sure to look at that data and to hear that you've got more than half of all hospitals ending up the year in a loss-making situation. It's pretty startling. And so that means that you need to be able to draw on cash reserves to be able to continue to fund your operations if your operations are in a lost situ.

So you mentioned that it'll prompt consolidations and layoffs. I think we've definitely seen pretty tough decisions being made by big systems and small hospitals alike in really looking at their cost structures and, and overhead and making decisions to downsize their corporate infrastructure. One of, one of the tools in your toolbox about how to be able to combat and mitigate some of those challenges.

As to your other comment, will surviving hospitals be flooded with more patients when they're already at capacity? To the extent that hospitals close in a fashion that's not an orderly wind down where replacement services are provided and it's done in a structured way, that does happen. I mean, you can look at the situation in Madera Community Hospital in California, quite a decent size hospital, and that closed in a rapid fashion around the beginning of the new year and cause.

What I read, I wasn't experiencing myself, but it sounded like a chaotic situation in the neighboring hospitals where patients were having to travel far to get care and those hospitals weren't able to manage the patient load. It's sort of the worst situation you can imagine is when you've got a hospital that hasn't got a plan.

Manage the safe delivery of care for that community, even if it can't continue to look after the patients themselves. It's the situation that you don't want. Yeah, and

Tyler Layne: I think that there's also the tension, and we were talking about this a little bit before we started recording. Figuring out what to do today versus how to position your hospital for success in the future.

Because so much of the difficulty in running a hospital now is figuring out just day-to-day cash flow, right? And figuring out how to keep the lights on. You've got labor costs that aren't going away. They're just going to be what you pay for good labor going forward. You still have inflationary pressures that while easing, are still gaining at a rapid pace that we haven't seen in some time.

And so I think that the difficulty, as Clare said, is sort of figuring out well, What does my future look like? I know that tomorrow if I move things around, I can pay these vendors and these vendors will give me a break and we can figure out how to live another day. But figuring out how to position yourself so that the community has some form of care going forward, what that care looks like, and what's really important to the community is really what hospital finance departments that are already stretched to their limits in terms of just figuring out how to keep going day to day, need to be focusing on.

Morgan Ribeiro: Right. And it's such a head-scratcher to me. I'm like, you know, they're short-staffed. They're short-staffed. You keep hearing that, and then it's layoffs. So you know, they're just having to make one hard decision after another.

And we've talked about this. Earlier a little bit, but just the distinction between kind of standalone or role or community hospitals versus these systems. I mean, I know one of the two bankruptcies that were filed in 2022, that was a seven hospital system. So it's not to say that systems are immune from this, but it does seem that they have.

At least more flexibility in order to react to some of this or balance out some of the losses where maybe one hospital is performing better than another and you could sort of balance that out across the system or share resources.

Clare Moylan: Yeah, I think the question of scale is a good one because even a seven hospital system isn't really giving you.

The scale that you need to be able to compete, it definitely helps them being a standalone, but that system that filed bankruptcy was seven community hospitals, so they would all individually be facing a lot of the constraints that we've talked about to deliver modern healthcare. The infrastructure and expertise and the capital that you need is immense.

You need capital to invest in new equipment, new technology. We've got automation and being able to get more efficient around processing and manual work. Just attracting and retaining the specialized workforce that you need, not only physicians, obviously very important nurses, caregivers, executive leadership managers, you know, people that are expert in revenue cycle and billing compliance, clinical quality, and go.

There's a huge cross-section of skill sets. You know it as well that in order to attract and retain those people, having the scale of what you can offer them through benefits, flexibility, training and education promotion, it all helps to be able to keep those skills and attract those skills that you need.

Not only that but then the scale of being able to have clinical coverage across the specialties, managing a clinical care model within a health system rather than a standalone approach. Obviously, payer contracting is a huge benefit of having scale. Similarly, contract negotiation with your suppliers and vendors.

A big one is just being able to capture data and insights and use those to make continuous improvement decision. As a large system, you probably have a data team who's looking at that as their full-time job and helping to mobilize your continuous improvement team to help use those insights. As a smaller system or as a standalone, you just have no ability to resource teams like that.

Another big issue is cyber, so managing risk. And having resources to handle a cyber-attack and those types of risks, scale obviously helps. So, Danone, as Tyler mentioned, you're dealing with the day-to-day drama of just being able to keep delivering good care and trying to get strategic. On the litany of things that I just mentioned, you can't do well at all of them.

You need to pick your battles and so then something buffers as a result. So as Tyler was saying, You need to try and look into the future and see what all this means for your organization. What are the big points to hit, and how do you solve for those big problems in a way that'll position you to try and keep control of your own destiny for as long as you can.

Tyler Layne: I think that there's this misconception that scale for scale's sake is good and that you can solve all of your problems by partnering together as a system and systems in and of themselves. You know, it takes a lot of work. Clare just named off at least 10 things that need to be done to run a hospital system well, and it takes work to exploit.

Those synergies into cost savings. And if you just patch together 10 hospitals, you've got to be really careful that you're ready to put in the work, that you have the capital to put in that work. Because otherwise you just have 10 times as many problems as you did as a single hospital in your sort of back to square one, if not in a worse position.

And so I think that scale done correctly is good, but I think that folks should avoid scale for scale's sake.

Jim Davis: Absolutely agree and I think that like culminates in what is the strategy and do they have the resources to not only put a strategy together but then execute on that strategy that is beyond what's going to take place and what do I need to do tomorrow?

I believe that is key.

Morgan Ribeiro: Great. So I feel like I have to always wrap up these conversations with something a little bit more positive and I can feel very doom and gloom and there are options. And I think there are ways, as you all put in your report, for hospital executive teams and boards to engage in some self-help.

What recommendations do you have specifically for community hospitals facing a myriad of pressures and challenges?

Clare Moylan: I can start. So the first thing is, as Jim mentioned, is having your strategy. And what we like to do is kind of interlink looking at your cash flow projection together with your strategy.

So a lot of organizations that we work with are really focused on your profit and loss. Statement as an indicator of your performance. But what we encourage organizations that we work with to do is look at your cash flow as well, because cash at the end of the day is king. And you can start with a, a multi-year of 12 month cash flow projection.

And if cash looks like it's tight, narrow it down to your 13 weeks. But it does. To give you an idea of where there might be pinch point in your cash flow, but also how much capital have you got to work with because when you turn yourself to your strategy, It gives you an idea of how, how tough you've got to be on your own organization or how critical you've got to be to make some tough decisions as you look at your strategy.

So for example, if you know that you've got a cast situation that in 12 months or 18 months from now, results in some pretty. Situations. Maybe with your lender, maybe you'll breach a covenant. Um, maybe you just think you're going to be running short on cash and need to find some new capital. You're going to look at your strategy and say, okay, let's look at our portfolio of services.

Let's look at profitability of each service. Let's look at duplication of what services we provide compared to our neighboring hospital, or can we partner with some regional facilities for some of the tertiary care and not duplicate services? Can we partner on staffing, training, and try and share resources?

It's going to give you that cash projection and understanding of your capital resources. It's going to help to refine the strategy in a way that you create a strategy. That helps you to be sustainable and meets your needs versus creating a strategy and inner vacuum of that also. So apart from looking at your portfolio of services, and it's not just starting and stop, you might think about transforming or growing services as well.

So honing in on certain specialties that you're really good at as a growth market for that, you've got a great clinical team behind and you can really put some investment behind it to grow. It might be transforming a service from just a strict inpatient to a, an inpatient, outpatient hybrid model, but all of that takes capital and investments.

So you've got to make sure you marry up your strategy with your capital wherewithal. The other aspect of that is just being critical about where you're putting your money. As in capital investments. Are there pet projects or projects that are going on. Uh, not necessarily going to deliver the returns that they were expected.

Do you need to pause or stop some of those capital decisions? And then looking at the long-term outlook with this critical lens, are we sustainable as is? What changes do we need to make in order to be sustainable? Do we need to look at partnering and how do we best achieve our organization's mission?

What is that mission and how do we best achieve it? Is it with us continuing to manage our operations or do we need to look at partnerships or other relationships to be able to do that effectively? What do you think, Jim?

Jim Davis: I agree wholeheartedly, and I think you, you said it very well. To me, the key is really that service alignment, having that forward-looking approach to aligning your liquidity management with the services you provide, and how do they align with not only the needs of the community but the future state of that.

And evolving those various service lines to optimize not only their cost, structure, their location but how to best serve the clients and patients that come in the door. And I think that's key. You have to marry those two things together. And I think sometimes that gets lost. And it gets separated into two different buckets, and I think it's very important to have that focus around not only who we are today, but who are we going to be and what services can we provide in partnership with our physicians in the community, as well as other facilities, either locally or within the market, within the region.

Tyler Layne: I don't have much to add to that. I think that was all very well said. I would just put in a pitch for sort of engaging with the various stakeholders with financial and otherwise, I think that everybody understands that this is a difficult time to be in the hospital business. Everybody understands. The future is uncertain.

And so I think that engaging with your lenders, engaging with your bondholders, engaging with your community are all very important in terms of figuring out sort of the overall strategy that Clare and Jim were talking about.

Clare Moylan: I think that one comment that might be helpful is, If you do this work and you identify a big problem, how do organizations best get together themselves to give that problem the attention that it deserves and solution it so that there's action taken in a timely way?

What we've experienced. If you just wait for the regular board meetings, usually they're not going to happen quickly enough, and the board members aren't necessarily going to be engaged enough to really get a lot of traction. These types of issues we're talking about a big strategic transformation move, changing services.

It helps, I think, to have a special committee set up, which includes leadership from the organizations and management that have the expertise in that area. Board members that bring special expertise in that area, bringing in professionals as well that can help guide you so that you understand. The problem, you've described the problem, identified the problem, understand your options and solutions, and then you can mobilize an aligned stakeholder group around actioning a solution.

So I'd encourage people to think about what's the governance structure that is going to help support moving forward on addressing some of these big issues and not just letting. Flounder around for months or years. And in that sense, sounds a bit like self-promotion, but getting professional advisors like your restructuring council or consultants can really help to provide structure in helping the company make, make good decisions, informed decisions, and staying in control of your own destiny.

You know, we're talking about like potential covenant defaults and things, organizations and management, hasn’t dealt with that in their day-to-day. So just get the help that you need at those critical junctures and it can help you to have a better outcome than just trying to go it alone.

Morgan Ribeiro: Yeah, and I think that's just very common, right?

And especially everything that we've talked about today, it may feel like to hospital leaders, like a hundred things are coming at you all at once. And to have some of that outside perspective, just to know like, alright, yes, there are a hundred things, but let's focus on these three and let's prioritize them in this order.

And that'll solve 50 percent of the problem through the bulk of the, the issues, and be able to allow you the flexibility to do some things and not be living in fear or to generate some revenue quickly. And so I think having that perspective from outsiders as well as you were talking about, not just the once a month board meeting, but thinking about how you lean into those within the organization too, and the power.

Grassroots mobilization can have, and working with your, your nurses and getting insight from them and people that are delivering services every day and thinking just beyond that monthly board meeting or if it's your executive team meeting, whatever it may be. But really leaning into the folks within the organization who are more often than not really willing to help and provide advice and input and be a part of the solution too.

Well, any parting thoughts?

Clare Moylan: I'll just wrap up. I guess what I would say are some key takeaways. So we covered our report that bankruptcies in healthcare are returning and the financial challenges are going to be with us for a while yet to come. But there's probably no silver bullet solution. It's good management blocking and tackling, as well as having a smart strategy that's going to address those key performance drivers in your organization.

Stress, the importance of cash flow, and the amount of capital that you need to keep pace with changes in the sector. Once you're short on cashier options become much more limited. Your bargaining power odes. So the earlier that you can read the tea leaves and mobilize a plan, the better off you're going to be.

And if you do end up tripping a loan covenant or expecting you will, it's a good idea to engage those restructuring professionals like ARS and Tyler to navigate with the lender. It's just good to have the people with the right expertise and you get a smoother process and a better one.

Morgan Ribeiro: I think those are good parting words.

Thank you all again for joining us. I look forward to chatting again soon.

Clare Moylan: Thank you very much. Enjoyed it. Yep.

Tyler Layne: Thank you, Morgan. Thank you.