Bankruptcies hit a three-year low in the second quarter, though the lull for providers is expected to be short-lived.
Only seven healthcare bankruptcies were recorded in the second quarter, the lowest quarterly total since the first three months of 2022.
Bankruptcies for providers came to a halt in the second quarter, but analysts predict increased levels of activity next year.
Severe Medicaid cuts in the One Big Beautiful Bill Act threaten providers reliant on funding from the program, especially vulnerable hospitals in rural settings.
Healthcare providers are enjoying a brief reprieve from bankruptcies, but financial trouble may be just around the corner.
Bankruptcy filings for healthcare companies with more than $10 million in liabilities plunged to just seven in the second quarter of 2025, marking the lowest quarterly total since the same number was recorded in the first quarter of 2022, according to a report by Gibbins Advisors.
The seven bankruptcies are also a significant downturn from the previous two quarters, which saw 17 through the first three months of this year and 19 in the final three months of 2024. After hospitals experienced four bankruptcies in each of those quarters, no hospital bankruptcies were filed during the second quarter.
Clinics and physician practices, meanwhile, had no bankruptcies in the second quarter and just one to start the year, putting the subsector on pace to finish 2025 well below 2024’s total of 10.
At the other end of the spectrum, pharmaceuticals had its highest quarterly total in nearly two years by suffering five bankruptcies in the second quarter. The remaining two bankruptcies in the most recent quarter came from a medical equipment and supply company and a senior care company.
The healthcare restructuring advisory firm now projects the total number of bankruptcy filings for 2025 to land around 48, representing a 16% drop from the 57 cases recorded in 2024.
However, there are clear signs of storm clouds ahead for providers due to policy shifts in Washington and heightened economic pressures.
The newly enacted One Big Beautiful Bill Act (OBBBA) includes steep funding cuts and its ramifications could particularly harm providers with weak balance sheets or heavy reliance on Medicaid reimbursement.
“The unprecedented funding cuts in the One Big Beautiful Bill Act are deeply troubling for the future of healthcare,” Clare Moylan, principal at Gibbins Advisors, said in a statement. “Hospitals serving vulnerable communities—especially those with high Medicaid populations and dependent on supplemental payments—face the greatest risk. Leadership teams must act now to assess the future impact and craft strategies to stay solvent.”
Additionally, hospital mergers and acquisitions have slowed amid ongoing market volatility, even as interest rates have loosened, Gibbins highlighted.
Hospitals and health systems also continued to content with rising labor expenses, leading to workforce shortages.
Elevated bankruptcy activity in 2026 is likely to be felt in rural settings, where many hospitals are already stretched thin on resources and susceptible to a major loss in revenue from the Medicaid cuts.
Jay Asser is the CEO editor for HealthLeaders.
KEY TAKEAWAYS
Only seven healthcare bankruptcies were recorded in the second quarter, the lowest quarterly total since the first three months of 2022.
Bankruptcies for providers came to a halt in the second quarter, but analysts predict increased levels of activity next year.
Severe Medicaid cuts in the One Big Beautiful Bill Act threaten providers reliant on funding from the program, especially vulnerable hospitals in rural settings.