Category Archives: Restructure

Trinity Health expects $2B revenue plunge as it cuts, furloughs more staff

Posted on by • Posted in 2020 Election Issues, Cash, Cash Reserves, Coronavirus, Crisis, Crisis Management, Deferred Healthcare, Economic Crisis, Economic Recovery, Economy Reopening, Employee Benefits, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Employer-Based Health Insurance, Health Insurance Coverage Adequacy, Health System, High Deductible Health Plans, Hospital, Hospital Industry, Job, Job Market, Job Search, Job Security, Liquidity, Market Outlook, Market Trends, Market Uncertainty, Net Income, Nonoperating Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Out of Pocket Expenses, Pandemic, Public Health, Public Safety, Quarantine, Restructure, Social Distancing, Turnaround, Turnaround Plan, Underinsured, Unemployment, Unemployment Insurance, Uninsured • Leave a comment

https://www.healthcaredive.com/news/trinity-health-cutting-cost-cutting-2-billion-revenue-shortfall/580738/

The Dumbest Things You Can Do With Your Money | Work + Money

Dive Brief:

  • Trinity Health, one of the nation’s largest nonprofit health systems, said Monday it will take more measures to cut costs due to the downturn spurred by the novel coronavirus. The restructuring plan includes eliminating positions, extending furloughs, severances and reductions in schedules. The decisions are being “customized” across the system based on factors that include volume projections and the cost and revenue challenges in each market.
  • The Livonia, Michigan-based hospital operator said it continues to treat COVID-19 patients, however, it has “for now seen declining numbers of very sick patients with COVID-19.”
  • The system said it expects revenue to be depressed or “below historical levels” for the remainder of this fiscal year and much of the next. It projects revenue to drop by $2 billion to $17.3 billion for fiscal year 2021, which starts after its June 30 year end.

Dive Insight:

In May, Trinity said it planned to furlough nearly 12% of its workforce — or 15,000 employees out of the 125,000 nationally.  

Trinity, one of the nation’s largest hospital operators with 92 facilities and operations across 22 states, is now broadening that restructuring, extending and adding new furloughs.

In a Monday bond filing, Trinity said its operations were “significantly” impacted by the effects of the pandemic as many operators saw depressed volumes due to shelter-in-place orders, which started in most of Trinity’s markets during the last two weeks of March.

“The effect of COVID-19 on the operating margins and financial results of Trinity Health is adverse and significant and, at this point, the duration of the pandemic and the length of time until Trinity Health returns to normal operations is unknown,” according to Monday’s bond filing.

The system said relief funds provided by the federal government have not been enough to cover its operating losses. Trinity has received $600 million in relief funds that do not have to be repaid and more in loans through the advanced Medicare payment program, according to a previous analysis by Healthcare Dive.

Still, the system said it has drawn on credit facilities totaling $1 billion to provide adequate liquidity during the pandemic. Trinity reported having 178 days cash on hand as of March 30.

Some nonprofits are faring better than Trinity and pulling back on earlier staffing cuts.

Mayo Clinic said last week it will call back its furloughed workers by the end of August and restore pay that had been cut due to the pandemic.

Mayo has some of the most cash on hand in terms of days when comparing other major nonprofit systems. Mayo had 252 days of cash on hand as of March 30, more than the other 20 largest nonprofits except Cleveland Clinic and New York-Presbyterian.

 

 

An optimistic view from health system workforce leaders

Posted on by • Posted in Artificial Intelligence, Coronavirus, Cost Management, Cost Reduction, Crisis, Crisis Management, Cross-Training, Economic Crisis, Employee Benefits, Employee Furlough, Employee Hiring Freeze, Employee Layoffs, Employee Pay Cuts, Employee Protections, Flex Staffing, Health System, Hospital, Hospital Industry, Leadership, Nurses, Restructure, Robotic Process Automation, Talent Identification, Talent Management, Turnaround, Workforce Over-Specialized • Leave a comment

https://mailchi.mp/9f24c0f1da9a/the-weekly-gist-june-5-2020?e=d1e747d2d8

Aldous Huxley and Brave New World: The Dark Side of Pleasure

Continuing our series of Gist member convenings to discuss the “Brave New World” that awaits in the post-pandemic era, we brought together a group of senior human resources and nursing executives this week for a Zoom roundtable.

Several themes emerged from the discussion. First, there was general consensus that the COVID crisis exposed a workforce that had become over-specialized and inflexible. Said one chief nursing officer, “Our workforce is much more brittle than we thought.” A key lesson learned is the need for increased cross-training—especially for nurses, and especially in critical care. Systems should work now to increase the supply of nurses comfortable in an ICU environment to enable hospitals to flex staff across settings and roles to deal with future waves of the virus.

Not surprisingly, layoffs were top-of-mind for many. Executives were of one mind on the need to safeguard clinical staff as much as possible, and many systems are now considering deep cuts to management and administrative ranks: “It’s easier to stand in front of your clinical staff and be able to say you’ve stripped millions from administration before turning to clinical cuts.”

There was broad consensus for the potential for artificial intelligence and robotic process automation to enable greater reliability and productivity at lower cost in areas such as billing, coding, and even some clinical functions—and that the pandemic will accelerate plans to implement these solutions.

On a more optimistic note, one executive shared that “relationships between clinicians and administrators have never been stronger. The pandemic has forced us to have difficult and constructive conversations we would have never had the courage to have before.”

Another noted the pandemic has spotlighted new leadership talent who might otherwise have been overlooked, and plans are now in place to formally recognize and retain newly crisis-tested talent for the work of restructuring the system.

On the whole, the discussion was far more upbeat that we had expected—as difficult as the crisis has been for many teams, the opportunity to rethink old ways of doing business seems to have created renewed enthusiasm even in the face of daunting financial and operational challenges ahead.

 

29 hospital bankruptcies in 2020

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https://www.beckershospitalreview.com/finance/29-hospital-bankruptcies-in-2020.html?utm_medium=email

Hospital Bankruptcy | HENRY KOTULA

From reimbursement landscape challenges to dwindling patient volumes, many factors lead hospitals to file for bankruptcy. At least 29 hospitals across the U.S. have filed for bankruptcy this year, and the financial challenges caused by the COVID-19 pandemic may force more hospitals to enter bankruptcy in coming months.

COVID-19 has created a cash crunch for many hospitals across the nation. They’re estimated to lose $200 billion between March 1 and June 30, according to a report from the American Hospital Association. More than $161 billion of the expected revenue losses will come from canceled services, including nonelective surgeries and outpatient treatment. Moody’s Investors Service said the sharp declines in revenue and cash flow caused by the suspension of elective procedures could cause more hospitals to default on their credit agreements this year than in 2019.

The hospitals that have filed for bankruptcy this year, which are part of the health systems listed below, have not cited the pandemic as a factor that pushed them into bankruptcy. Though most of the hospitals are operating as normal throughout the bankruptcy process, at least two of the hospitals that entered bankruptcy this year have shut down.

Quorum Health
Brentwood, Tenn.-based Quorum Health and its 23 hospitals filed for Chapter 11 bankruptcy April 7. The company, a spinoff of Franklin, Tenn.-based Community Health Systems, said the bankruptcy filing is part of a plan to recapitalize the business and reduce its debt load.

Randolph Health
Randolph Health, a single-hospital system based in Asheboro, N.C., filed for Chapter 11 bankruptcy March 6. Randolph Health leaders have taken several steps in recent years to improve the health system’s financial picture, and they’ve made progress toward that goal. Entering Chapter 11 bankruptcy will allow Randolph Health to restructure its debt, which officials said is necessary to ensure the health system continues to provide care for many more years.

Faith Community Health System
Faith Community Health System, a single-hospital system based in Jacksboro, Texas, filed for bankruptcy protection on Feb. 29. The health system, part of the Jack County (Texas) Hospital District, entered Chapter 9 bankruptcy — a bankruptcy proceeding that offers distressed municipalities protection from creditors while a repayment plan is negotiated.

Pinnacle Healthcare System
Overland Park, Kan.-based Pinnacle Healthcare System and its hospitals in Missouri and Kansas filed for Chapter 11 bankruptcy on Feb. 12. Pinnacle Regional Hospital in Boonville, Mo., formerly known as Cooper County Memorial Hospital, entered bankruptcy about a month after it abruptly shut down. Pinnacle Regional Hospital in Overland Park, formerly called Blue Valley Hospital, closed about two months after entering bankruptcy.

Thomas Health
South Charleston, W.Va.-based Thomas Health and its two hospitals filed for Chapter 11 bankruptcy on Jan. 10. In an affidavit filed in the bankruptcy case, Thomas Health President and CEO Daniel J. Lauffer cited several reasons the health system is facing financial challenges, including reduced reimbursement rates and patient outmigration. The health system said the bankruptcy process will help it address its long-term debt and pursue strategic opportunities.

 

 

 

Cartoon – Times are Tough

Posted on by • Posted in Cartoon, Consultant, Consulting, Crisis, Crisis Management, Economic Crisis, Financially Distressed, Health System, Hospital, Hospital Industry, Net Income, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Restructure, Times, Tough • Leave a comment

Times Are Tough - Small Business Trends

Envision Healthcare considering bankruptcy filing

Posted on by • Posted in Bankruptcy, Cash, Cash Reserves, Cash-Flow Improvements, Coronavirus, Credit Quality, Credit Ratings, Creditors, Crisis, Crisis Management, Emergency Care, Emergency Room Staffing, Financial Pressure, Financially Distressed, Pandemic, Physician, Physician Practice Management, Physician Staffing, Private Equity, Restructure, Turnaround, Turnaround Plan, Venture Capital • Leave a comment

https://mailchi.mp/0d4b1a52108c/the-weekly-gist-april-24-2020?e=d1e747d2d8

KKR-backed Envision Healthcare hires restructuring advisers ...

 

National physician staffing firm Envision Healthcare is considering filing for bankruptcy, according a report from Bloomberg. Sources say the company, backed by private equity (PE) firm KKR, which acquired Envision for $9.9B in June 2018, has hired restructuring advisors and is working with an investment bank. The abrupt halt to elective surgeries and reduction in emergency room volumes due to COVID-19 has caused Envision’s business to shrink by 65 to 75 percent in just two weeks at its 168 open ambulatory surgery centers (ASCs), compared to the same time period last year.

The Nashville-based company, which employs over 25,000 physicians and advanced practitioners, has already been reducing pay for providers and executives, in addition to implementing temporary furloughs. Envision is also struggling with a debt load of more than $7B, resulting from its 2018 leveraged buyout, and has been unable to convince its bondholders to approve a debt swap.

It remains to be seen whether Envision will be a bellwether for how other PE-backed physician groups will weather the ongoing COVID crisis. While Envision’s composition of mainly hospital- and ASC-based providers, coupled with its huge debt load, leave it on especially shaky financial footing, many PE-backed physician groups will struggle this year to achieve anything close to the 20 percent annual rate of return often promised to investors.

If high-profile PE-backed groups like Envision end up declaring bankruptcy, it will likely impact the calculus of the many independent practices which may have previously looked to PE firms for acquisition, and temper the enthusiasm of investors, who might see physician staffing and practice roll-ups as less attractive as volumes continue to fluctuate.

 

 

 

Envision hires restructuring advisers, considers bankruptcy filing

Posted on by • Posted in Bankruptcy, Chapter 11, Coronavirus, Crisis, Crisis Management, Economic Crisis, Economic Stimulus, Employee Benefits, Employee Furlough, Employee Layoffs, Employee Pay Cuts, Employee Protections, Employee Retirement Contributions, Operating Expenses, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Physician, Physician Staffing, Private Equity, Restructure • Leave a comment

https://www.beckershospitalreview.com/finance/envision-hires-restructuring-advisers-considers-bankruptcy-filing.html?utm_medium=email

Envision Healthcare Said to Be Considering Bankruptcy, 2 Years ...

Envision Healthcare, a Nashville, Tenn.-based physician staffing company owned by private equity firm KKR, is struggling to manage its $7 billion debt load and recently hired lawyers and an investment bank to advise on its restructuring options, sources told Bloomberg.

The company is looking at restructuring options, including a potential Chapter 11 bankruptcy filing, as it faces financial pressure from the COVID-19 pandemic, according to Bloomberg. Envision has seen a significant decline in patient volume across its practices and specialties during the pandemic.  

No decision has been made on a course of action for Envision, and the company is still seeking to ease its debt burden by swapping $1.2 billion of unsecured notes for a new term loan. Creditors have until the end of the month to decide whether to participate in the deal.

The company is exploring its restructuring options after taking several steps to improve its financial position, including holding back pay for physicians, reducing salaries of senior leadership and furloughing nonclinical staff. The company said clinical pay will be reduced in services with low patient volumes, and performance-based bonuses and clinician profit-sharing will be delayed until the fall. Additionally, Envision temporarily suspended retirement contributions, merit increases and promotions for all employees.

About a week after Envision implemented many of the changes, U.S. Sen. Elizabeth Warren of Massachusetts and U.S. Rep. Katie Porter of California sent a letter to Envision and other healthcare staffing companies backed by private equity regarding pay and benefits.

The letter, which Ms. Porter posted on Twitter, said Envision is cutting its physicians’ pay and benefits, “all while our doctors face new financial strains of their own” amid the COVID-19 pandemic.

In response, Envision cited challenges healthcare organizations are facing.

“The nation’s healthcare system has experienced a drastic drop in patient volume since the beginning of the COVID-19 crisis,” wrote Envision, which has more than 40,000 team members, 27,000 of whom are physicians and clinicians. “Even as COVID-19 fills emergency departments in hot spots around the country, Envision’s overall emergency volume is actually down 45 percent.”

Hospital and physician groups are trying to secure funds from the Coronavirus Aid, Relief and Economic Security Act and get additional aid. Though the private equity industry is lobbying Washington to gain access to the funds, it remains unclear whether private equity-backed companies like Envision will receive the emergency government funds. 

 

 

 

 

DOJ investigates Providence St. Joseph Health’s Swedish Health Services

Posted on by • Posted in Civil Investigation, Compliance Issues, Dept of Justice (DOJ), Health System, Hospital, Hospital Industry, Net Income, Operating Income, Operating Margin, Operating Performance, Operating Revenue, Restructure, Stark Law • Leave a comment

https://www.modernhealthcare.com/providers/doj-investigates-providence-st-joseph-healths-swedish-health-services?utm_source=modern-healthcare-daily-finance-thursday&utm_medium=email&utm_campaign=20190829&utm_content=article1-readmore

The U.S. Department of Justice is probing Providence St. Joseph Health’s Swedish Health Services in a civil investigation, the not-for-profit integrated health system revealed in its recent quarterly earnings report.

The DOJ requested documents from Seattle-based Swedish related to certain arrangements, joint ventures and physician organizations, according to the report. Providence St. Joseph said that the investigation will not have a “material adverse effect” on its financials.

“Like all large institutions, Swedish is subject periodically to investigations and lawsuits,” Swedish said in a statement. “Per our policy, we are not able to discuss the specifics of any investigation. However, Swedish fully cooperates with all investigations.”

Renton, Wash.-based Providence St. Joseph also disclosed in the earnings report malpractice allegations against certain affiliates, although the “probable recoveries in these proceedings and the estimated costs and expenses of defense will be within applicable insurance limits or will not materially adversely affect the business or properties of the system,” the organization said.

The DOJ said in a statement that it does not confirm, deny or comment on investigations.

In 2014, HHS’ Office of Inspector General audited Swedish Health’s Swedish Medical Center–First Hill, an acute-care hospital in Seattle. It found that about two-thirds of 257 inpatient and outpatient claims from 2010 to 2012 did not fully comply with Medicare billing requirements, resulting in net overpayments of nearly $937,500.

Also, Swedish Health was accused in 2017 of asking neurosurgeons to increase patient volume and perform unnecessary surgeries.

The recent investigation involving Swedish may relate to a delicate balance providers must strike with their affiliates.

Health systems have been carefully navigating around the Stark law, which aims to curb Medicare and Medicaid spending by prohibiting physicians and hospitals from making referrals based on their financial self-interest. But the 1989 statutes conflict with outcome-oriented care, providers argue as the law dissuades them from incentive-based arrangements.

The Stark law offers little, if any, room for error and carries significant financial penalties, experts said. Maintaining compliance and abiding audits can drain resources.

Through six months of Providence St. Joseph Health’s 2019 fiscal year, it reported an operating income of $250 million on operating revenue of $12.6 billion, up from $30 million of operating income on $12 billion of operating revenue over the same period prior. The health system reported $41 million in restructuring costs, as it aims to streamline operations and boost productivity.

For 2018, the organization drew just $3 million in operating income last year on $24.4 billion in total operating revenue. Excluding asset impairment, severance and consulting costs related to restructuring, the system said its 2018 operating income would have been $165 million. The restructuring costs are being spread across 2018 and 2019.

As it restructures, Providence St. Joseph has been expanding its non-acute portfolio, forming a for-profit population health management company, launching its second, $150 million venture fund and buying a revenue-cycle management company based on blockchain technology.