The Challenge
Sierra Vista Hospital is a community-operated, 15-bed critical access hospital about two hours south of Albuquerque, NM. The hospital was facing sizable financial, operational and leadership challenges:
- Declining inpatient volume
- 5 days cash on hand and cash exhausted in 90-120 days
- Expense growth exceeded revenue growth by 244 percent
- Negative annual EBITDA
- $32 million in new debt and a new hospital building project under way with no ability to meet debt service payments
- Debt covenant default
- CEO and CFO termination
Octave Leadership Advisory Services’ Solutions
Over a two-year engagement, Octave implemented financial, operational, managerial, quality and patient experience improvements. We worked rapidly to implement a multidisciplinary approach to help strengthen Sierra Vista Hospital’s financial and operational capabilities. Octave’s activities included:
- Successfully recruiting a new interim CEO and CFO,
- Rightsizing the hospital’s workforce,
- Enhancing the organization’s revenue cycle process post-EHR conversion,
- Reviewing and resolving regulatory compliance protocols,
- Providing guidance across case management, physician relations, managed care contracting and IT conversion activities,
- Implementing a supply chain conversion,
- Improving the hospital’s financial statement reporting and reimbursement modeling,
- Negotiating suspension of debt service payments to allow for financial improvement impacts,
- Reestablishing relationships with the New Mexico Legislative Finance Committee, and
- Adjusting proposed new building project to affordable debt level.
Results
Audited results from fiscal year 2020 show the turnaround of Sierra Vista Hospital is working.
- Negative annual EBITDA improved to a positive 10 percent or $2,665,163.
- Days cash on hand has increased from five to 133.
- Phase II of the new building opened in September 2020, completing the new hospital building project.
