Mariner, IHS file chapter 11.

Following in the footsteps of fellow post-acute powerhouses Vencor and Sun Healthcare Group, Integrated Health Services Inc. and Mariner Post- Acute Network each have filed for Chapter 11 bankruptcy protection. Atlanta-based Mariner operates 406 skilled nursing facilities, 13 long term acute-care hospitals, and 37 pharmacies. In its January filing with U.S. Bankruptcy Court in Wilmington, Del., Mariner reported assets of $1.3 billion and debt of $2.7 billion.

IHS operates more than 1,600 post-acute locations. In its February filing, also in Delaware, the Sparks, Md.-based company listed assets of $3.6 billion and liabilities of $4.1 billion.

Mariner and IHS are the sixth and seventh national providers, respectively, to file for bankruptcy protection in the past seven months. In addition to Vencor and Sun, others include Lenox Health Care Inc., Frontier Group Inc., and NewCare Health Corp.

And like those companies, IHS and Mariner both cite financial pressure created by the Balanced Budget Act of 1997 and its implementation.

Mariner says the new law reduced its Medicare reimbursement rate by a whopping $115 per resident per day, and Francis Cash, Mariner's chairman, president and CEO, isn't optimistic about his company's prospects for the near term.

"While the measure of relief provided by Congress last year in the Medicare Balanced Budget Refinement Act was an important step, the crisis grows as Medicare cuts, explosive litigation costs and staffing shortages threaten the viability of providers," he said in a prepared statement.

Robert Elkins, chairman and CEO of IHS, said in a prepared statement that "the dramatic impact of the implementation of the [BBA] on our revenues and cash flow severely impacted the company's ability to service our current capital structure. We are taking steps to assure that we emerge form the reorganization process with a sound capital structure."

IHS has obtained a commitment for up to $300 million in debtor-in-possession (DIP) financing with Citibank, to fund normal business operations.

Mariner has obtained a commitment for $100 million in DIP financing Chase Manhattan Bank and $50 million from PNC Bank.