• The Company started to experience operating losses and tight liquidity due to the following:
– Unexpected costs associated with outsourcing the revenue cycle.
– As a result of the economic malaise, patient encounters and managed care lives decreased 4% and 2%, respectively.
– Costs incurred from implementing a state-of-the-art software system designed to integrate accounting, patient billing and electronic medical records
–Collectability of account receivable.
• As a result of the Company’s financial performance, the Company’s senior lender restricted management from borrowing under its line of credit facility.
• Fort Dearborn (FDP) was retained to review the Company’s financial forecast and assist management in accessing its existing line of credit facility with the goal of refinancing with a new senior lender. As part of the process, FDP performed the following:
– Performed a deep dive understanding over the company’s operations, information system conversion, changes in reimbursement rates and other regulatory matters.
– Based on our thorough understanding of the Company, Fort Dearborn developed a financial forecast that incorporated expected changes to the business as well as management’s and Fort Dearborn’s profit improvement initiatives.
– Analyzed accounts receivable and estimated uncollectible balances and its impact on profitability, EBITDA and debt service.