This is not the news that healthcare provider patients and staff members want to hear. A shocking announcement came when a major US health provider filed for Chapter 11 bankruptcy. Many patients were put at risk in different regions. This major chain provides healthcare services for several specialized hospitals. They filed bankruptcy reports to ensure that businesses can receive recognition.
Medical sector facing bankruptcy
The healthcare sector is currently facing many challenges and is under a lot of pressure. The sector has experienced economic headwinds in the past few years, particularly in 2025, especially this year, after finishing 2024 with the second highest level of bankruptcy filing for six years, 2019-2024.
But there have been some good news over these difficult past years. The good news last year was that bankruptcy filings fell 28% in 2024, down 57 times, from the peak of 79 bankruptcies that were filled in 2023. According to an annual survey conducted by Gibbins Advisor, an advisory firm, these numbers exceeded the annual average of 42 filings shown between 2019 and 2022.
Healthcare provider for bankruptcy claimants
As mentioned before, healthcare providers filling Chapter 11 bankruptcy is nothing new. In fact, some of the most notable Chapter 11 filings of 2024 included providers of CareMax Inc., a clinical care center operator based in Miami, Florida.
Additionally, the November 2024 bankruptcy filing was created by WellPath Holdings, who was identified as the leading provider of prisons and mental health facilities. The provider applied for Chapter 11 protection, created provisions to reorganize its business and sell certain assets to ad hoc groups of premeasure lenders. Also, CarePoint Health Systems, a New Jersey-based hospital and health center facility, filed Chapter 11 in November 2024 to restructure its unsustainable debt.
If this is not enough, the lead medical holdings of major healthcare providers began in 2025 when they filed for bankruptcy in January with plans to reorganize certain medical assets. The provider owns and operates 16 acute and behavioral hospitals in California, Connecticut, Pennsylvania and Rhode Island. The aim was to sell two medical centers in Rhode Island and through the lawsuit another medical center in Pennsylvania.
Currently, there are majors filed for Chapter 11 bankruptcy by six landmark hospital facilities. The goal is to reorganize businesses located in three different states, the Midwest and the South. On March 9, Florida LLC's Landmark Holdings filed a petition with the U.S. Bankruptcy Court for the Central District of Florida, citing assets of $10 to $50 million and liabilities of $50 million and between $50 million and $100 million.
Reasons for financial challenges
The healthcare sector only filed five bankruptcy filings in 2024, down from 2023's 12. However, the Steward Healthcare System includes 31 hospitals, the largest hospital bankruptcy in the last 30 years. This has alternated with a major impact on the sector, but the main question people ask is, “Why is this sector struggling financially?”
There is no easy way to answer this question. When we look at the cost of living and prices, we have to pay to stay alive. As you can imagine, there are many reasons why healthcare providers find it difficult to operate properly in the current sector. Some of the reasons why the healthcare industry is experiencing economic distress:
Capital constraints, cost of living is experienced in increasing labor shortages, changes in health regulations, and payments from commercial issues regarding the claims of Medicare Advantage of Care Administrators, and macroeconomic challenges.
All these aspects need to be considered. This is because at the end of millions of patients, they suffer due to this decision being made ongoing by health care providers to file for Chapter 11 bankruptcy.
