Skip to Main Content
June 01, 2020

Health Law Daily

Number Of Health Care Organizations That Breach Debt Covenants May Increase In 2020 Due To Pandemic

  • June 01, 2020

Modern Healthcare (5/29, Bannow, Subscription Publication) reported, “With the coronavirus pandemic slashing hospitals’ revenue and cash flow, the number of organizations that breach their debt covenants is likely to tick up in 2020.” Although “federal stimulus grants under the CARES Act may mitigate some of those risks...nevertheless, a new report from Moody’s Investors Service predicted that hospitals will have a difficult time staying in compliance.” There is much “still up in the air with respect to hospitals’ financial futures, given the uncertain pace of recovery as elective procedures resume, which will vary by region,” and “it’s also unclear whether the suspension of elective procedures due to the global pandemic will afford hospitals protection from breaches under their bond agreements.”