The healthcare sector has faced economic distress in recent years, leading hospital chains, healthcare providers, and other medical-related firms to seek out-of-court restructurings, bankruptcy filings, and sometimes shut down operations.
The reasons for financial distress in the industry include capital constraints, cost increases and labor shortages, healthcare regulatory changes, issues with payments from commercial and managed care payors, and other macroeconomic challenges.
Hospital chains have already been involved in some of the most significant healthcare bankruptcy filings in 2025.
Related: Major hospital chain owner files for Chapter 11 bankruptcy
Prospect Medical Holdings, which owned and operated 16 acute care and behavioral hospitals in California, Connecticut, Pennsylvania, and Rhode Island, began 2025 by filing for bankruptcy in January with plans to reorganize certain medical assets, sell two medical centers in Rhode Island, and divest from another in Pennsylvania through its case.
The parent company of six Landmark Hospital specialty hospital facilities filed for Chapter 11 bankruptcy on March 9 to reorganize six facilities that are located in Florida, Georgia, and Missouri.
Physician staffing services file for bankruptcy
Financial distress has also derailed several physician staffing services as well.
American Physician Partners LLC on Sept. 18, 2023, filed for Chapter 11 protection to wind down its business affairs and transition all of its clients to emergency medicine companies, hospitals or health systems at about 150 hospitals nationwide.
Another physician services provider, Envision Healthcare Corp., on May 15, 2023, filed for Chapter 11 protection with a restructuring support agreement that called for its ambulatory surgical centers arm, Amsurg, to purchase the company’s surgical centers for $300 million. The agreement would also eliminate $5.6 billion in debt.
NES Health Services files Chapter 7 to liquidate and wind down operations.
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NES Health to wind down and cease operations
Finally, physician-led staffing firm NES Health Services PC has filed for Chapter 7 bankruptcy to wind down and cease operations after failing to pay emergency department doctors for months at about 35 hospitals nationwide.
Related: Award-winning cosmetics brand files for Chapter 11 bankruptcy
The debtor listed $1 million to $10 million in assets and $10 million to $50 million in liabilities in its petition filed on Feb. 21.
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Tiburon, Calif.-based NES asserted that it has faced significant financial difficulties that left it with no funding or available cash, the company said on its website’s NES Health Wind Down FAQ. The company was unable to make payments to key vendors/contractors, and it had laid off administrative staff in November 2024, the website said.
While NES Health may have breached contracts, it said that it “does not have resources to perform any further contractual obligations.” It advised concerned people to consult their attorneys.
All legal actions against the debtor are subject to an automatic stay while the Chapter 7 case proceeds.
NES Health also said that its malpractice insurance and tail coverage, which covers claims that occurred when a policy was active but reported after the policy expired, had lapsed on Nov. 24, 2024.
The company stopped paying its contract physicians in September 2024 when it emailed the contractors that their regular payment would be delayed, according to ACEP Now.
NES Health in October 2024 said that it was delaying payments again as it transitioned to a new billing company. The company sent a third email to its contractors on Nov. 22, 2024, informing them that it was ceasing operations and still didn’t pay them.
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