Healthcare Bankruptcy Filings Stabilize in the First Half of 2026, but Medicaid and Policy Reforms Are Set to Intensify Financial Pressure
The Gibbins Advisors report showed a shift in the mix toward smaller company bankruptcies (with liabilities $10m-$50m) and an uplift in Clinic/Physician Practice filings.
NASHVILLE, TN, July 20, 2026: Gibbins Advisors, a leading middle-market healthcare restructuring advisory firm, has released its Interim 2026 Healthcare Bankruptcy Report, analyzing Chapter 11 filings in the healthcare sector from January 1, 2019, through June 30, 2026, for companies with more than $10 million in liabilities (“Healthcare Bankruptcy Filings”).
The report shows that the pace of filings in H1 2026 sits around the quarterly average of~12.5 since 2019, with 12 filings in Q1 2026 and 14 filings in Q2 2026. Filing activity in the most recent four quarters clusters around the long-term average, which follows a period of relative volatility in quarterly volumes across 2024 to 2025.
"The relative stability in healthcare bankruptcy filings is surprising considering the on-the-ground pressures we see operators facing every day. There is a lot bubbling under the surface that will ultimately need to be resolved in some form of restructuring, though not all will be resolved in court," said Ronald Winters, Principal at Gibbins Advisors.
By size, the smaller-sized cases in the research (companies with $10 million–$50 million in liabilities) saw activity growth that indicates a potential for that cohort to finish the year 57% higher than 2025, from 23 filings in 2025 to 36 in 2026F. Activity across cases with higher liabilities ($50 million and higher) in H1 2026 is trending flat or lower than 2025.
By subsector, Clinics/Physician Practice bankruptcies comprised almost 30% of healthcare filings in H1 2026, with the subsector’s activity levels in 2026F on pace to reach their highest level since 2019. Other subsectors saw bankruptcy activity levels trending flat or declining over 2025: Annualizing H1 2026 filings indicates that pharmaceutical filings are trending on par with 2025, Hospital filings would be trending approximately on par with 2025 after including a Chapter 9 hospital bankruptcy, and Medical Equipment & Supplies recorded no filings in the first half of 2026. Continuing a consistent pattern, Senior Care and Pharmaceutical cases together comprise nearly half of all Healthcare Bankruptcy Filings since 2019.
Key Drivers and Outlook:
Healthcare providers face a widening divide as Medicaid cuts, uncompensated care, and reimbursement pressures define the next chapter - even as workforce challenges persist.
"The period through COVID and its aftermath was defined by labor and workforce challenges. While those issues remain, the next chapter for healthcare will be defined by the ability to get paid, and how much is paid, for services provided" said Clare Moylan, Principal at Gibbins Advisors.
1. A widening gap between "haves" and "have nots." Median hospital operating margins climbed to 2.5% year-to-date through April 2026, but the improvement is uneven. S&P has described healthcare financial performance as increasingly polarized, with stronger organizations pulling further ahead while weaker providers remain vulnerable.
2. Medicaid funding cuts and coverage losses take hold. The so-called "One Big Beautiful Bill Act” (Public Law 119-21), signed into law July 4, 2025, enacted the largest federal health spending reduction in history, hitting safety-net providers with high government payer mix hardest — but the impact is widespread. The lapse of enhanced ACA premium tax credits is already driving coverage losses: HCA Healthcare has raised its full-year ACA exchange loss estimate to $1 billion–$1.2 billion, and initial 2027 insurer filings point to another year of double-digit premium increases. When new Medicaid work requirements take effect in 2027, the challenges will compound.
3. Payors add to the pressure. Hospital claim denials rose 12% (inpatient) and 14% (outpatient) from 2024 to 2025, and a 2025 survey found 41% of providers now see denial rates above 10%. Insurers, citing rising costs and risk, raised 2026 premiums by a median of 18% nationally — more than twice the increase proposed for 2025.
4. Labor and supply costs remain elevated. Year-to-date through April 2026, total hospital expense per adjusted discharge rose 5% versus 2025, led by non-labor expense (+8%) and drugs, while labor expense per adjusted discharge stayed roughly flat. Median healthcare staff pay rose 4.3% in 2025, up from 2.7% in 2024. 82% of healthcare leaders expect supply costs to rise by at least 15%.
5. M&A activity rebounds. Hospital and health system M&A rebounded sharply in the first quarter of 2026, with 22 transactions — the highest first-quarter total since 2020 — signaling strategic portfolio rationalization ahead of upcoming policy and reimbursement pressures.
6. Macroeconomic forces shifting care delivery and operational transformation: Continued shifts in care delivery toward outpatient, community, and home-based settings, alongside strategic cost transformation and the adoption of AI and automation, will be critical for healthcare organizations navigating a period of relentless pressure.
Please note: Any third party sources used in the Key Drivers and Outlook section are referenced in the report.
For questions, comments or more information, contact Clare Moylan, cmoylan@gibbinsadvisors.com or Ronald Winters, rwinters@gibbinsadvisors.com.
ABOUT GIBBINS ADVISORS
Gibbins Advisors (“GA”) is a healthcare-specialist restructuring and turnaround firm that primarily serves the middle market (i.e., organizations with revenue $50m to $500m). GA brings together seasoned restructuring professionals with healthcare operations executives - allowing the team to move quickly, ask the right questions, and craft strategies that deliver lasting results. At its core, GA helps healthcare organizations and their stakeholders – whether lenders, creditors, or investors – stabilize finances, overcome complex challenges, and strategically position for long-term success. GA is known for bringing clarity and resolution to high-stakes situations so that organizations emerge stronger, more resilient, and better positioned to continue delivering high-quality patient care for the future.
Headquartered in Nashville, Tennessee, GA has grown to include operations across the United States and Australia.