Petersen Health Care Files for Bankruptcy Following Ransomware Attacks
Peoria, Illinois-based Petersen Health Care, one of the largest operators of nursing homes in the United States, filed for Chapter 11 protection in a Delaware bankruptcy court on Wednesday following cyberattacks that led to defaults on government-backed loans. Petersen Health Care operates more than 90 nursing homes in Illinois, Missouri, and Iowa, employs almost 4,000 people, and has almost 6,800 residents. The company had more than $339 million in revenue in 2023 but has debts of more than $295 million, including $45 million owed on healthcare facility loans insured by the U.S. Department of Housing and Urban Development.
Petersen Health Care has had long-term financial difficulties. Like many other nursing home operators, Petersen Health Care has been struggling due to a decline in demand for nursing homes since the start of the pandemic, with many people favoring in-home care, and it has been difficult to attract qualified nursing staff due to increased competition. Petersen Health Care has also been struggling to be reimbursed for Medicaid costs and has a backlog of unpaid claims due to the 2015-2017 budget impasse in Illinois.
While in this precarious position, Petersen Health Care fell victim to a ransomware attack in October 2023. The Cactus ransomware group claimed responsibility for the attack and started leaking some of the data stolen in the attack when the ransom was not paid. Petersen Health Care said a substantial number of business records were lost, which made it incredibly difficult to bill customers and insurers, resulting in substantial delays in reimbursement for the services provided. Then in February 2024, another ransomware group, Blackcat, attacked Change Healthcare. The attack caused a prolonged outage that has affected healthcare providers across the country. As a result of the outages, payments to providers ground to a halt. Change Healthcare was a major payor for Petersen Health Care, adding to the company’s financial difficulties.
The cyberattacks could not have come at a worse time for Petersen Health Care causing it to default on repayments on its HUD loans. After defaulting on the loans, its lenders placed 19 of its locations into receivership, which caused further disruption to its operations. Petersen Health Care has been transitioning those locations to the receiver’s control but said it is facing demand after demand from the receiver while trying to address its ongoing financial problems. Petersen Health Care said that even with these problems it remains committed to providing quality care. The company has secured a $45 million loan to cover operational expenses during the Chapter 11 proceedings and is working on restructuring its debts to ensure a more sustainable future.
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