CMC launches new plan

Coulee Medical Center is taking an abrupt change in the direction of a plan that was introduced just six months ago as a way to right its finances, and it’s rebuilding its in-house billing department with an emphasis on efficiency.

The new direction comes just half a year after then-CEO Jonathan Owens decided to cut non-medical staff and outsource the billing of insurers to an out-of-state company in an effort to get paid more quickly for services.

But the effort backfired, says current Chief Executive Officer Ramona Hicks, and the hospital is now owed about $2 million more than it was a year earlier, a total of over $8.9 million in accounts receivable at the end of August.

That’s money that isn’t going to make payments, such as to Grant County, which so far has covered nearly $3.7 million for CMC’s warrants.

And the current financial condition puts CMC out of compliance with promises it made to the federal Department of Housing and Urban Development, which as the guarantor on the loan to build the new hospital, will now be taking a more active role in coaching CMC leaders on direction.

HUD, along with Red Capital, the bonding agent on that construction project, were on the phone as CMC leaders met with county commissioners Tuesday to spell out the new plan.

Commissioners were “very positive” and voted to cap CMC’s limit at $4.7 million, Hicks said, noting the limit is “very do-able.”

The county had originally set a cap at $1.5 million. The hospital has been drawing on county warrants since February 2016.

After talking with other small-hospital CEOs, Hicks has brought in a new advisor and is launching a new plan that includes rebuilding the hospital’s in-house billing department and more.

Jason McCormick, senior healthcare consultant with B2B CFO, describes CMC as an organization that “has all the resources to be financially viable,” noting “an excellent medical staff and employee base.”

The current cash flow crunch resulted from several converging factors, he said in an interview Oct. 11, including a repayment of millions demanded by Medicaid, an ill-advised pursuit of a new electronic medical records system, which was paid for with $2.7 million in cash, and the outsourcing of billing.

It currently takes about 100 days for CMC to get paid by insurers, McCormick said, but that should be cut to 50.

The new plan includes cutting that large balance in receivables in half to generate enough cash to pay down the county warrants by $2 million in six months.

McCormick said they also plan to rebuild patient volumes by “rebuilding trust” with the community and to focus on cost management.

Hicks said CMC will also be refocusing on making sure it’s offering what the community wants, so some form of community conversations will be taking place.

McCormick, who says he specializes in small, critical-access hospitals like CMC and helps a couple of them each year, says CMC has a “very high probability of success,” noting a strong board and leadership in place.

Hicks, who had been made interim CEO in July after Owens’ resignation, said the search for a new CEO has been stopped for the time being.

She said the hospital is also looking at its price list, known as a charge master, which has not been changed since 2012. Some charges were already raised Oct. 1, but McCormick said changes were made strategically, not across the board.