Nebraska hospital hit with credit downgrade over EMR problems

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Fitch Ratings has downgraded Scottsbluff, Neb.-based Regional West Health Services' credit rating to "BB+" from "BBB."

The rating action, which occurred in late 2019, was primarily due to consecutive years of weak operational performance and severe cash reserve deterioration.

"Fitch attributes the weak performance and liquidity deterioration to disruptions from RWHS's recent electronic medical record implementation, which includes ongoing revenue cycle issues," the credit rating agency said. 

In fiscal 2018, RWHS had $59 million in accounts receivable, which equated to 93 days in AR. Through the first nine months of fiscal 2019, the hospital had $54.5 million in AR, which equates to 83 days in AR. This demonstrates "minimal improvement in its revenue cycle," Fitch said.

The credit rating agency expects RWHS to improve its operating performance and liquidity in fiscal 2020 as it recovers from its Cerner EMR implementation issues and reduces its outstanding accounts receivable.

H. Hod Kosman, chairman of RWHS' board of directors, said the hospital is working with Cerner to correct the issues.

"The Board of Directors of Regional West Health Services and Regional West Medical Center have been, and continue to be, aware of and involved with the ongoing efforts to require the EMR provider to correct the issues," he wrote in an opinion piece published in the Scottsbluff Star-Herald. "The EMR is better but not yet up to our expectations."

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