The turnaround plan comes five months after Moody’s Investor Service downgraded Redeemer rating to “B1” from “Ba2.” The Oct. 15 downgrade reflected the system’s ongoing operating cash flow losses and cash declines, as well as a likely breach of its fiscal 2024 debt service coverage covenant.
Redeemer reported a $48.4 million operating loss in fiscal 2024, a 37% increase from the prior year, and posted an $18.8 million operating loss in the first quarter of fiscal 2025 (the three months ending Sept. 30).
The health system’s turnaround plan includes:
- Improving emergency department throughput, increasing patient volumes and reducing length of stay.
- Selling non-core properties to generate capital.
- Evaluating partnerships.
- Standardizing revenue cycle processes to cut denials and accounts receivable backlog.
- Improving clinical documentation for accurate patient acuity.
- Maximizing reimbursement across care settings.
- Reducing costs through vendor negotiations and consolidation.
The turnaround plan also includes evaluating reimbursement levels, profitability and market positioning of its service offerings, as well as measures to optimize staffing models and reduce reliance on agency staffing and preimum pay programs, according to the Journal.
The financial strategy focuses on fiscal years 2025 and 2026, with some initiatives extending into FY 2027. Redeemer is targeting recurring savings of $13.2 million in FY 2025 and $31 million in FY 2026, plus additional one-time savings.
Redeemer did not respond to Becker’s request for comment.
