Bankruptcy Court Decisions Vol. Put simply, Allegheny is a large example of the problems being faced nationwide by the healthcare industry - and observers say things are only going to get worse. Sources close to this particular case say that the debtors that make up this filing may have been mismanaged and overleveraged, but the primary reason they failed is because of the changes the government made last fall in the way it reimburses hospitals and HMOs.
Hospitals are cash flow entities.
This is just the first of many. Actually, Allegheny is only one of many healthcare entities to fail in the last year - it just happens to be particularly large. More than any other healthcare segment, home health care businesses are either closing or filing for bankruptcy protection all over the country. Nursing homes too are in great stress. In addition to changes in reimbursement rates and amounts, the government has heightened its oversight of Medicare billing practices, partly because of numerous instances of fraud.