Mission Accomplished
Independent hospital, located in the Northeast
$139M total patient revenue, not-for-profit organization
Client Challenge
A long-established hospital — one of three in a small market with excess capacity — faced a tough competitive environment.
Burdened with an unsustainable staffing mix and outdated third-party contracts, the hospital lost approximately $9.5 million
during the 2006 fiscal year, was burning through its cash reserves and was near defaulting on a cash covenant. Chief
financial officer resigned, leaving a vacancy in a key management position.
• Contracts with managed care providers were not being negotiated.
• Nearly broke the covenant on a line of credit.
• No tools in place to manage productivity.
• Financial statements were not prepared in a timely manner.
• Lack of confidence in accuracy of financial statements by senior management.
• Due to a lack of capital, the system was starved for technology upgrades.
Timely Solutions
The hospital hired QHR to work collaboratively with the board of directors to achieve positive outcomes. The QHR
team implemented changes to rectify the problem areas:
• Brought in interim executive management, including the CEO and CFO.
• Renegotiated more favorable managed care agreements
• Instituted a primary care model where RNs and LPNs provide patient care instead of hospital aides
• Reduced staff of approximately 1,400 employees by 7%, including an 11% reduction in management staff
• Implemented daily productivity reporting
• Reinvested cash into capital upgrades
• Held accounting team accountable for accuracy and timeliness of reporting
Featured Results
In less than one year, the team was able to produce a $13 million turnaround for the hospital.
• Realized $8 million in savings from renegotiated contracts
• Reduced days in accounts receivable from 51 to 41, resulting in a significant increase in cash flow
• Experienced 10 percent surgical growth due to new equipment and capital purchases
• Saved $3 million in salaries even after providing raises to employees
• Gained $2 million in savings from improved supply chain management
• Primary care model resulted in better charting and evaluations and better outcomes for the patient.
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