Competitors Lead Hospital's Financial Turnaround

Philip Betbeze, for HealthLeaders Media , September 3, 2010

Well, they weren't doing it exclusively out of the goodness of their hearts, but Natividad faced a real possibility of closure if it couldn't get things turned around. The county, also one of the smallest in the state, couldn't stomach that type of annual loss. Natividad's competitors knew that if they lost the public hospital, they would take the annual hit for uncompensated care from the uninsured. In fact, they had explored the possibility of a merger with Salinas Valley, but the cash flow issue at Natividad was so uncertain, they couldn't be assured that they'd be able to absorb and turn around the facility, too. They just weren't sure it could be done.

In return for the donation, during the time the money was being disbursed, each donor got two seats on Natividad's board. Huron Consulting, now known as Wellspring Partners, was chosen to lead the turnaround. At a cost of $12 million, the consulting firm worked on the usual suspects. Revenue cycle was at the top of the list. And at the top of that initiative: Harry Weis, who was acting CFO at the time.  

He and two colleagues from Huron completed a business plan in 2007 that outlined a journey of improvement for Natividad. Importantly, through that initiative, which covers everything from billing, to financial assistance teams for patients, to coding appropriately, Natividad realized a positive net cash flow even though the income statement showed a $3.7 million loss because it included depreciation.

"They had not had that positive net cash flow in any recollectable fiscal year," says Weis, who was appointed CEO in April 2009, when the consulting engagement ended.

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