Each medical facility, hospital and practice that we work with has its own unique challenges. While every agency has a different set of complications and history that will affect the approach that will work best for them, there is one consistent theme among C & E Acquisition Group’s clients – positive results. Let’s take a look at a specific case study of just one of our clients’ successes after working with us. To protect the confidentiality of our client, we have omitted references to the group specifically, and will speak generally about the group’s financial situation and demographics.
Background
This East Coast client facility approached C & E Acquisition Group after hiring a new CFO several years ago. At the time of the new financial chief’s appointment, the medical center was running a significant annual loss. The year preceding his appointment, the hospital barely eked out a profit, while the following year the hospital reported a net loss of more than $10 million. The agency was in desperate need of a financial revitalization, and a new CFO – and our help – was exactly the change that was needed to help implement just such a change.
The facility faced significant challenges in relation to its physical structures and demographics, including a significant investment needed to modernize record-keeping practices to an electronic system – a federal mandate – and build up infrastructure; a position in its community as an ER facility that operated as a sort of primary care facility for indigent and less fortunate individuals; and a significant population of clients who were immigrants or undocumented individuals in need of care. These factors left the hospital with a large volume of uncompensated care. On top of this, the facility’s traditional focus on pursuing third-party payers like insurance companies and government programs like Medicare and Medicaid – with limited success, as well –left self-pay collection programs neglected and underutilized.
Looking at Inventory
We stepped in and took a look at the facility’s financial situation and outstanding patient accounts. Our review discovered that:
- Nearly $150 million in receivables was warehoused and not being worked at all
- An additional roughly $100 million in receivables had been placed with third-party collection agencies, but those agencies were not effectively managing the accounts
- Every month, new receivables were aging into the system, but without a comprehensive strategy and approach, these accounts were subject to the same problems
The new CFO was looking for ways help achieve success in three key areas – communication, improving the group’s patient-centric approach and maintaining control of their inventory while achieving better results. That’s where C & E Acquisition Group stepped in.
Initial Actions
One of the primary goals of the new CFO was to raise funds rapidly, which was a key part of our process. The hospital agreed to start by selling the warehoused internal inventory first, securing a significant revenue stream and moving the accounts to a point where they could be more effectively worked and managed. Next, the receivables that had been outsourced were recalled and more stringent requirements were put in place to hold these third-party agencies more accountable for their monthly yields. Lastly, we helped the facility commit to a new workflow where open receivables would age into agency placement, spend a specified period with those groups and then be recalled and sold to generate consistent recurring income.
Results
These changes were implemented in phases, but by the close of the fiscal year following C & E Acquisition Group’s efforts, the hospital had made a marked recovery from the prior year. After a year with a more than $10 million net loss, the hospital righted the ship – in part through better control of their receivable accounts. By the close of the fiscal year, the facility had achieved nearly $30 million in positive revenue – a swing of almost $40 million during the course of just one year.
Through the implementation of these new processes and procedures, the hospital gained more than $1 million in cash from the start, helping the hospital hire, train and retrain staffers who were moved from back-end collection and recovery efforts to increase the focus on front-end screening, insurance verification and effective admission processes to accelerate payment and ensure coverage. The new processes in place with third-party agencies also helped to streamline vendor management, allowing a more cohesive and concrete workflow to form, making these relationships more profitable for both parties. Lastly, by fully implementing these procedures and analyzing the data, the hospital was able to steadily predict its monthly revenue stream from these accounts, based on the volume of patient admissions, permitting the facility to have a more consistent and reliable understanding of their expected incomes for budgeting and allowing for a more effective allocation of staff and resources.
Takeaways
While this example may not be the exact circumstances faced at your hospital or practice, the results are fairly typical among C & E Acquisition Group’s clients. Our two programs – REVENUE 120 and REVENUE 365 – help facilities by introducing an initial cash infusion that can be used to help implement further changes to drive revenues on a more actionable and consistent basis.
There are many reasons that CFOs at medical facilities, groups and hospitals contact C & E Acquisition Group. From a proactive standpoint, we can help enhance existing capabilities to collect payments up front for services, which aids in reducing the delays involved with waiting for payment. Our process also helps mitigate third-party payer denials for service or delays, and can also assist in your efforts for update or convert your information system to comply with federal requirements.
C & E also deals with hospitals that have reached out to us as a reaction to a recent change or discovery. Some facilities may find that they had underestimated the value of their bad debt, and are now in need of a comprehensive strategy for recovering these balances. Other times – as was the situation with our case study example – we are contacted as part of a major organizational change, with new management looking for ways to improve practices that were in place prior to their arrival.