Healthcare bankruptcies dipped for a second consecutive year in 2025, though upticks in certain provider segments and upcoming reimbursement headwinds are cause for caution, according to an annual report from Gibbins Advisors.
The restructuring advisory firm spotted 45 Chapter 11 bankruptcy filings last year among healthcare companies with more than $10 million in liabilities. This is a 21% decline from 2024’s 57 such bankruptcies, and well below the recent peak of 2023’s 79 bankruptcies.
“Many organizations don’t file for bankruptcy protection because conditions deteriorate overnight—they often file when liquidity runs out and options narrow,” Clare Moylan, principal at Gibbons Advisors, said in a release. “The lower filing volumes seen in 2025 may indicate that distressed healthcare organizations are taking earlier action, which would be a positive development, rather than reflecting a reduction in underlying market stress.”
Most (30) of the filings from last year were middle-market-sized cases, or those between $10 million and $100 million in total liabilities, and just six healthcare bankruptcies occurred among organizations with over half a billion in liabilities, according to the report. Filings were also frontloaded on the calendar, with 17 occurring during the first quarter of the year.
Bankruptcies among pharmaceutical (10) and senior care (13) companies again drove much of the tally, with the former representing a year-over-year decline and the latter an increase. Filings also dropped for clinicians/physician practices, from 10 to six, and for medical equipment and supplies companies, from eight to five.
Bankruptcy filings among the hospital sector have ping-ponged, from 12 in 2023 to five in 2024 and now eight across 2025. Noteworthy among these was the January 2025 filing of Prospect Medical Holdings, a 16-hospital for-profit that had a four-state footprint and about $2.3 billion in funded debt.
Senior care and hospitals’ year-to-year increases notwithstanding, the advisory firm warned that 2025’s “lower bankruptcy volumes don’t tell the full story” of healthcare’s financial pressures.
Its report highlighted a slew of financial headwinds, such as impending Medicaid funding cuts and other labor and supply cost pressures, alongside other warnings from credit agencies and consulting firms that the hospital sector is increasingly being split between the “haves” and “have nots.”
“From where we sit today, the impact of impending funding cuts is not theoretical,” Ronald Winters, a principal with Gibbons Advisors, said. “With effects beginning in 2026 and likely escalating over the next five years, providers that do not model these scenarios, plan ahead and make disciplined decisions about strategy, priorities and resource allocation risk being forced into reactive decisions.”