Suburban Not-for-Profit Healthcare System with a Distressed Continuing Care Retirement Community
Turnaround Management & CRO Services
A small suburban healthcare system with eight operating units, including a general acute care hospital and a 600-resident continuing care retirement community (CCRC) which was under development, was experiencing severe financial distress due to declining patient volumes and an inappropriate capital structure to fund the construction of the CCRC.
Issues
- All eight operating units were experiencing negative EBIDTA margins due to inefficient staffing and a poor operating model.
- CCRC’s capital structure did not provide sufficient capital to fund the construction of both individual resident units and campus infrastructure.
- Low morale among nursing and medical staffs due to lack of management focus on quality improvement and training.
- Adversarial relations with local government over zoning and related issues.
- Cumbersome and costly management and governance structures.
- Serious corporate compliance issues resulting from incorrect patient coding and billing.
Approach
- Sold or closed six of the eight operating units.
- Combined the hospital and the CCRC into a single corporation to create the asset base necessary to recapitalize the CCRC. Refinanced all existing debt and created the capacity to build out the CCRC.
- Replaced the existing hospital management with skilled staff.
- Immediately focused on patient quality care and staff training.
- Voluntarily disclosed corporate compliance issues to the U.S. Department of Justice.
- Expanded patient service offerings, including opening the first new inpatient OB program in the market in more than 30 years.
- Developed an effective sales and marketing program for the CCRC.
Results
- Hospital was returned to profitability and successfully sold to a national publicly traded hospital company at a significant profit which was invested in a community foundation.
- On time and on budget completion of the CCRC including full occupancy of the independent living units and construction and occupancy of the assisted living and skilled nursing units. Sale of the CCRC to a regional not-for-profit operator of similar communities .
- Returned all facilities to full accreditation and licensure compliance.
- Settlement of all claims with Medicare and Medicaid without payment of penalties or interest or the requirement for a corporate integrity agreement.