Astria Health making progress on emerging from bankruptcy, CEO says

2019-08-15 | Yakima Herald-Republic

Aug. 14-- Aug. 14--Astria Health is making progress on its goal to emerge from bankruptcy protection by year's end, CEO John Gallagher said during a speech to the Yakima Sunrise Rotary Wednesday.

He again emphasized the "unique situation" that led to the organization filing for Chapter 11 bankruptcy protection on May 6.

Most health care systems and hospitals are forced into bankruptcy because their expenses or liabilities are far above their revenues and assets, he said. But in Astria's case, a vendor was unable to collect $75 million in billing claims over nine months, causing a significant hit to cash flow.

"We had a positive income statement," he said. "We had a mechanical issue with our billing and collecting."

Gallagher was invited to speak to the club by Joe Ketterer, a Sunrise Rotary member and Astria Health's senior director of physician practices.

Since filing for bankruptcy protection, Astria Health has made progress on its billing and collection through a new revenue cycle vendor, Gallagher said.

The vendor, Gaffey Healthcare, started billing and collecting alongside the former vendor in June. On Aug. 1, the vendor took over the entire revenue cycle operation.

One issue with the former vendor is that it lacked the technology to check and follow-up on bills effectively, Gallagher said. He cited one claim that took up to 22 weeks to collect.

The new vendor has a system where it can ping a series of bills and immediately identify which claims need follow-up. As a result, a claim like the example above could be collected within 45 to 60 days, Gallagher said.

"It's a vast difference in speed," Gallagher said.

Gallagher said Astria Health is considering proposals from law firms that can help it pursue legal action against the former lender, which the organization has declined to name.

Chapter 11 allows an organization to reorganize its finances through a court-approved plan, while freeing it from creditors' lawsuits during that work.

The improvement in collections has provided Astria Health and its facilities enough cash flow to continue day-to-day operations without having to tap all of the $36 million in debtor-in-possession financing approved by the court, Gallagher said. Most of the financing -- approximately $21 million -- was used to pay off two creditors, Banner Bank and MidCap Financial Trust.

The remaining funds -- about $15 million -- have yet to be used, Gallagher said.

Gallagher said Astria Health aims to have letters of commitment related to debt restructuring from its creditors by the end of October. Astria Health is also working to secure exit financing from Piper Jaffray.

Gallagher sprinkled the presentation with situations where Astria Health had quickly responded to various crises in the community. One example he used was when Astria Regional Medical Center had to respond to 11 trauma cases spurred by multiple vehicle accidents on June 20. He also told the story of a man who was able to prevent amputation of one of his limbs through treatments from one of Astria Health's wound specialists.

Gallagher said Astria Health needed to file for Chapter 11 to quickly resolve its situation and continue providing crucial health care to Yakima Valley residents.

"We look forward to taking care of the of the community," he said. "We're not going anywhere."

Patient care reports

Late last week, Susan N. Goodman, an Arizona attorney who was appointed to serve as patient care ombudsman for Astria Health's bankruptcy, filed several reports about her initial visits to several Astria Health facilities including its three hospitals and Astria Health Centers throughout the Yakima Valley.

She filed a report for each of the three hospitals, Astria Regional Medical Center in Yakima, Astria Toppenish Hospital and Astria Sunnyside Hospital. In each of those reports, she also reported on visits to other Astria Health facilities.

Goodman said she did not see patient care or safety concerns at Astria Regional Medical Center, and shortage of some medical supplies before bankruptcy had been "largely alleviated."

The Yakima hospital, however, continues to have issues with staffing. The hospital's departments continue to be negatively impacted by staffing shortages, especially with nurses and technicians, Goodman's report said. Goodman said she plans to work closely with the hospital's chief nursing officer on recruitment efforts and staff departure monitoring.

She also did not find any patient care issues at Astria Toppenish Hospital, but also noted that some departments were functioning with a "limited number of staff," her report said.

Goodman said Astria Sunnyside Hospital "reported less pre-bankruptcy supply strain and staff departures." There was no decline in patient care, she wrote.

A patient care ombudsman is appointed to monitor the quality of patient care and represent patients during a health care business' bankruptcy. Goodman has served or is currently serving in that role for nearly 30 health care bankruptcies across the country. Goodman wrote she would file reports at least every 60 days about future visits to Astria Health facilities.

Reach Mai Hoang at or Twitter @maiphoang