Presence Health focuses on revenue cycle improvement in turnaround plan

After recording a $186 million loss in fiscal year 2015, Presence Health, a 12-hospital system based in Chicago, put a two-year turnaround plan into place with the goal of returning to profitability by the fourth quarter of 2016.

In March, Presence President and CEO Michael Englehart attributed the system's deteriorating financial health to inadequate collections systems, which forced the hospital to write off some bills for being too old to collect on. That was top of mind when Mr. Englehart implemented the system's turnaround plan, which largely focused on revenue cycle improvement and restructuring the system's balance sheet.

The system took a number of steps to improve its financial performance last year. For example, to mitigate financial covenant breaches, Presence obtained a $528.1 million bridge loan in May. The system said it would use the funds to pay off loans it received from seven banks in 2013. In August, Presence closed on a $1 billion bond sale. Facilitated by the Illinois Finance Authority, the deal gave the system some breathing room as it worked to shore up its finances. Presence said it would use the proceeds of the bond sale to refinance debt.

At the J.P. Morgan Healthcare Conference Tuesday, Presence Health CFO Jim Kelley said the system has made significant progress since implementing its turnaround plan. He said Presence's operating income is exceeding plan goals through the third quarter of 2016 and cash on had is better than projected.

Looking ahead, Presence aims to continue its financial and operational improvement by focusing on strategic initiatives that set the system up for success under multiple models as the healthcare market evolves. These initiatives include partnering with health plans, growing market share and improving patient and employee experience.

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