The Miami-based health care provider CareMax has had a difficult year. The business is now preparing to liquidate 29 of its facilities, including its corporate headquarters, after declaring Chapter 11 bankruptcy.
The closures are part of a reorganization attempt to reduce expenses and address financial difficulties caused by a number of causes, including some difficult business transactions and general economic pressures.
What is the current state of CareMax?
On November 17, CareMax formally filed for Chapter 11 in the Northern District of Texas.
The corporation is turning down leases on 29 buildings, including corporate offices, medical centers, and facilities that were either closed, in the process of closing, or had never opened, according to court records.
CareMax outlined intentions in a bankruptcy court request to relocate the equipment from these sites to its other functioning operations.
As of right now, the organization has 82 active property leases, 46 of which are operational locations where patients are treated.
A major step in CareMax’s efforts to streamline operations, the closures are anticipated to reduce the company’s monthly lease expenses from $2.2 million to roughly $1 million.
An Overview of the Sites Closing
South Florida will see the closure of a number of locations, including:
- 833 North Homestead Blvd., Homestead
- 8700 West Flagler Street, Miami (corporate headquarters)
- 601 N. Flamingo Road, Pembroke Pines
Other closures range across Florida, Tennessee, New York, and Texas. CareMax had to pay for the strategic opening of many of these locations close to Steward Health Care hospitals.
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The consequences of Steward Health Care
This is when things become complex. CareMax’s commercial partnership with Steward Health Care, a Dallas-based company that also declared bankruptcy earlier this year, appears to be linked to CareMax’s problems.
CareMax purchased Steward’s Medicare value-based care company in 2022 for $135 million in cash and shares.
CareMax gained access to Steward’s patient base and physician network through this agreement, but it also exposed the business to risks when Steward’s financial issues surfaced.
CareMax’s Medicare Shared Savings (MSS) program suffered as a result of Steward’s decision to reject its contract with CareMax during its own bankruptcy case, which also caused the company’s value to decline and the health care provider’s profits to decline.
Additional Difficulties
However, CareMax’s problems aren’t just due to Steward’s demise. The company’s finances have been squeezed by inflation, growing labor and equipment costs, and slow reimbursement rates. Paul Rundell, restructuring officer of CareMax, noted that it has become more difficult to keep up with operating expenses due to industry-wide issues like rising supply costs and pay inflation.
