
Sierra Vista Hospital was facing significant financial, operational and leadership challenges.
- Negative annual EBITDA
- 5 Days Cash on Hand
- Declining inpatient volume
- Expense growth exceeded revenue growth by 244%
- Cash exhausted in 90-120 days
- $32 million in new debt
- New hospital building project under way with no ability to meet debt service payments
- Debt covenant default
- Disastrous IT system conversion
- CEO and CFO termination
The Challenge
Recommended by a New Mexico state senator, QHR Health engaged with Sierra Vista Hospital to address the Critical Access Hospital’s declining inpatient volume, expense growth and balance sheet deterioration.
QHR Health Solutions
Over a two-year engagement, QHR Health implemented financial, operational, managerial, quality and patient experience improvements. We worked rapidly to implement a multidisciplinary consulting approach to help strengthen Sierra Vista Hospital’s financial and operational capabilities.
QHR Health’s activities included:
- Successfully recruiting a new interim CEO and CFO
to the hospital - Rightsizing the hospital’s workforce
- Enhancing the organization’s revenue cycle process post EHR conversion
- Reviewing and resolving regulatory compliance protocols
- Providing guidance across case management, physician relations, managed care contracting and IT conversion activities
- Implementing a supply chain conversion
- Improving the hospital’s financial statement reporting and reimbursement modeling
- Negotiating suspension of debt service payments to allow for financial improvement impacts
- Reestablishing relationships with the New Mexico Legislative Finance Committee
- Adjusting proposed new building project to affordable debt level
Results
Fiscal Year End 2019 Audit Results
- Operating Revenues increased 14% or $3 million
- Operating income improved by $3.2 million from an operating loss of $2.6 million to
a profit of $600,000 - EBITDA improved from -$574,000 to $2.4 million
- Salaries as a percentage of net patient revenue improved from 58% to 42%
- Days Cash on Hand increased from 5 days to 82 days
- Account Receivables improved from 79 to 56 gross days
- Accounts Payable turnover improved from 46 to 27 days
- Debt successfully restructured to complete building project
- Revenue Cycle & payor issues resolved increasing Commercial insurer
payments by 52% ($4 million)
Fiscal Year End 2020 Interim Results: Prior to COVID-19 Impacts
- Building Project Phase I successfully completed and put into service in July 2019
- Building Project Phase II on schedule to open in August 2020 funded largely
by NM State grant funds. - EBITDA of $1.7 million (10%) for first eight months
- Days Cash at 70
COVID-19
- Ongoing education and updates on CARES Act
- Provision of tools to estimate and validate relief payments
- Clinical, financial guidance, CDC information at https://qhrcovid19.com/
- Provision of Personal Protective Equipment directly from QHR procured supply
- “Playbook” providing guidance on re-opening of closed services