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Managing creditor relationships during cash flow hardships

December 14, 2023 In The News 5 min read
Authors:
Sandor Jacobson Duane J. Fitch
Many leaders new to financing negotiations will offer unrealistic terms or revenue expectations. This can quickly backfire and result in additional costs, ruptured trust, and spoiled creditor relationships. Learn more from Sandor Jacobson and Duane Fitch’s article in MedCity News.
Healthcare professionals considering how to manage their creditor relationships.After several tumultuous years, including industrywide financial challenges in 2022, many health leaders likely approached 2023 with hope that the year would bring a return to normalcy. However, several factors, ranging from the curtailing of federal pandemic-era support to high levels of inflation, elevated interest rates and supply chain costs, and ongoing labor shortages, have combined to prolong a challenging financial landscape for a startling number of healthcare organizations.

With dwindling cash on hand, many healthcare organizations are in the uncomfortable position of deciding to cut back some services, eliminate certain departments, reduce headcount, and, in extreme cases, close entire facilities. In addition to these difficult decisions, many increasingly find themselves, often for the first time, trying to negotiate with their creditors, including their critical suppliers, as part of their efforts to maintain or return to normalcy, and/or achieve compliance with certain debt covenants.

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