Senior Care and Clinics/Physician Practices Drive Healthcare Bankruptcy Filings in Q1 2026: Snapshot Report
Key developments:
Q1 2026 Chapter 11 Healthcare bankruptcy filings rose ~33% vs. Q4 2025 (9 to 12) returning to the 7-year quarterly average.
Senior Care and Clinics/Physician Practices each posted 4 filings in Q1 2026, together representing two-thirds of quarterly volume.
Larger cases (>$100m liabilities) held flat quarter-over-quarter at 3 filings each in Q4 2025 and Q1 2026.
Outlook for 2026: Hospital & Health System M&A Rebounds in Q1 2026 as Providers Pursue Strategic Positioning and Prepare for the One Big Beautiful Bill Act (“OBBBA”) Impact
M&A rebound: Q1 2026 saw 22 announced Hospital & Health System transactions, the highest first-quarter volume since 2020.
Medicaid funding cuts (OBBBA): The OBBBA became law July 4, 2025, projecting $964B in federal Medicaid reductions over 10 years. Safety-net providers as well as those serving working-age populations (e.g., hospitals, FQHCs) are most at risk.
Rural Health Transformation Program: A new 5-year, $50B fund begins distributing $10B annually from FY2026; per-rural-resident allocations vary widely by state.
Widening “haves vs. have nots” divide: Fitch describes non-profit hospital credit quality as “trifurcated”—top 20% strong, middle 65% stagnating, bottom 15% deteriorating.
Supply cost pressures: Middle East supply chain disruption (Strait of Hormuz). While an imminent medicine shortage is unlikely given inventory buffers, generic drugs and supply costs are increasing. Tariffs are still relevant to cost increases.
Labor cost pressures: Median healthcare staff pay rose 4.3% in 2025 (up from 2.7% in 2024).
Payor pressure intensifying: Insurers raised 2026 premiums by a median 18% nationally—more than double the 2025 increase—while hospital claim denials rose 12% (inpatient) and 14% (outpatient) from 2024 to 2025.
Source references are provided in the downloadable report.
For questions, comments, or more information, contact Clare Moylan: cmoylan@gibbinsadvisors.com.
About Gibbins Advisors www.gibbinsadvisors.com
Gibbins Advisors (“GA”) is a leading restructuring and transformation firm specializing in middle-market healthcare. Headquartered in Nashville, Tennessee, the firm was founded in 2019 by Ronald Winters and Clare Moylan and has grown to include operations across the United States and Australia.
The GA team of seasoned professionals combines restructuring experts and healthcare operations executives to lead and advise clients through times of challenge and transition. The firm excels in bringing clarity and resolution to complex and high-stakes situations and maintains a strong track record in successful execution.