HealthLawProf Blog

Editor: Katharine Van Tassel
Akron Univ. School of Law

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Wednesday, December 12, 2007

Good News for Attorneys: Hospitals Need You

Law.com has an article discussing a disturbing trend among hospitals - filing for bankruptcy.

When Culver City, Calif.'s Brotman Medical Center filed for Chapter 11 bankruptcy in late October, attorneys paid attention.  Its financial struggles are likely to be a harbinger of hospital woes to come as the number of uninsured patients grows and hospital revenues decrease.  "All of those factors are forming a real storm for hospitals," said Stephen Warren, a partner in O'Melveny & Myers' L.A. office. "And this wave is going to involve sophisticated counsel."

Of course, law.com's take is that this is an interesting opportunity for attorneys, however, it sounds terrible for patients and hospitals.  Law.com focuses on California but that state doesn't sound too different from many others.  It reports:

Many California lawyers are especially interested in the hospital woes, since the state's high cost of compliance and higher costs of operating magnify the problems. The state's retrofitting requirements add an additional layer of expense to some already beleaguered hospitals. That's coupled with overarching stresses such as the proliferation of urgent-care centers as an alternative to hospital care. "I think there has to be a shakeout," Buchalter Nemer's Seigel said. "The hospital industry is going through a revolution." While more established hospitals like L.A.'s Cedars-Sinai will likely weather the storm, smaller community hospitals such as Brotman will be the hardest hit, he said.

The trend isn't going unnoticed. Just recently, members of Southern California's Turnaround Management Association, a group of professionals who work with distressed businesses, organized a presentation titled "Hospitals in Need of Care: The financial crisis looming in southern California's hospital system." "California's hospital system may be the 'canary in the mine' -- demonstrating weaknesses that are extant throughout the United States but have yet to become obvious elsewhere," the presentation stated. . . .

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