Dive Brief:

• Hospital operator Landmark Holdings of Florida filed for Chapter 11 bankruptcy protections on March 9, becoming the latest in a growing number of embattled providers to restructure amid financial headwinds. 
• In first day court filings, Landmark, which owns or operates six long-term acute care hospitals across three states, said rising labor and pharmaceutical costs, as well as stagnating Medicare reimbursements, had dinged Landmark’s profitability and threatened the provider’s ability to make timely loan repayments.
• Still, Landmark told the court it expects to have enough cash on hand to keep its hospitals open through the bankruptcy process.

Dive Insight:

Landmark, which operates hospitals in Missouri, Georgia and Florida, opened its first facility in Missouri in 2006. Since that time, the provider has grown to operate five long-term acute care facilities and manage a sixth, with hospitals in Athens, Georgia; Savannah, Georgia; Cape Girardeau, Missouri; Columbia, Missouri; Joplin, Missouri; and Lehigh Acres, Florida.

Landmark had grown its revenue prior to declaring bankruptcy. For the year ending Dec. 31, 2023, Landmark increased revenue by more than $7 million compared to 2022 to total $79.4 million, the system said in first day filings.

However, expenses also climbed. Contract labor costs in particular exploded, rising 229% since 2020, while salaries, wages and benefits for skilled nurses grew by about 29%. 

The system said pharmaceutical costs have also started to climb between 2022 and 2024. 

“The combination of these factors has strained Landmark’s ability to generate cash flow sufficient to service its outstanding debt obligation,” the system said.

Landmark imposed numerous cost cutting initiatives in an attempt to stave off a bankruptcy filing, including layoffs at its business office in Cape Girardeau, trimming the number of human resource professionals and accountants in Florida, and closing a Florida office. It also outsourced hospital billing and collections.

However, Landmark’s efforts were ultimately unsuccessful. The provider reported approximately $70 million in assets at the time of filing and $86 million in liabilities.

Landmark’s debts include a $30 million loan to Amerant Bank and approximately $13 million in outstanding lease payments to two real estate investment trusts which own the underlying real estate for its hospital portfolio.

The provider said it has “sufficient cash on hand to fund ongoing operations of the hospitals to ensure that their patients have continued access to critical care,” however it will begin a marketing process to transition the facilities to new capital providers or owners.

The filing comes as hospital bankruptcies are generally rising. 

Although bankruptcies were slightly down in 2024 compared to record highs of 2023, filings are elevated compared to before the pandemic, according to research from restructuring advisory firm Gibbins Advisors.

Last year, Steward Health Care’s Chapter 11 bankruptcy filing dominated headlines as the company sold off its massive portfolio of 31 hospitals.

More provider bankruptcies could come in 2025 if industry headwinds continue, experts say. Health systems filing for Chapter 11 restructuring have cited insufficient reimbursements from government programs as a contributing strain on their finances.