LifeCare Holdings, a Plano, Texas-based operator of long-term acute-care hospitals, filed for bankruptcy on Monday in U.S. Bankruptcy Court in Wilmington, Del., blaming declining Medicare rates for its need to seek Chapter 11 protection.
Private-equity owned LifeCare, which operates 17 healthcare facilities in nine states, claimed that Medicare's establishment of patient criteria to qualify as a compliant long-term acute-care facility in 2015 led to reductions in reimbursement rates in 2015 and 2016, according to CEO James Murray's declaration of bankruptcy filed with the court on Tuesday.
LifeCare also said that the number of Medicare patients who qualify for services at its hospitals has declined and resulted in an oversupply of beds. LifeCare said it tried to address its decreasing Medicare rates and patient volume by improving its core business, adding complementary businesses to address specific diseases, closing hospitals and diversifying its revenue by acquiring home health agencies. Those home health agencies have not filed for bankruptcy.
LifeCare is currently exploring a potential sale for some or all of its assets. It reported total combined long-term debt of $185 million, according to court documents.
This isn't the first time LifeCare has filed for bankruptcy. The company sought Chapter 11 protection in 2012 to address liquidity concerns after Hurricane Katrina and the effects of certain regulations reduced reimbursement rates and led to decreases in revenue, according to court documents. LifeCare was then bought by Hospital Acquisition, a vehicle created by its senior secured lenders, and the court dismissed its Chapter 11 cases.
LifeCare is the second chain of long-term acute-care hospitals to file for bankruptcy in recent months. Promise Project Japan, a Boca Raton, Fla.-based chain of long-term care hospitals and nursing homes, filed for bankruptcy in November 2018.