If those providers file for bankruptcy, it could hurt the returns available even to secured lenders. John Everetts, chairman and CEO of Boston-based HPSC Inc., said it is a lesson that is fresh in the memories of people in his company. We ve been in the business for 25 years. We ve learned by making our own mistakes on what not to do. He said those lessons have gone a long way toward teaching him and others in the company how to make provisions against those receivables and to prepare for other contingencies.
Security is one way to prepare, because it reduces the severity of loss if problems develop.
But banks reduced interest in the sector could also create an opportunity for lenders still in the market. Steve Silver, vice president of business development with Heller Healthcare, said the opportunities come when nursing homes and other health care providers turn more to secured lenders for financing. In the near term, Widra said, the fortunes of companies relying upon Medicare and Medicaid reimbursements will likely improve. In the long term, however, prospects for unsecured lenders are less clear.