Summary of Work:
Warbird deployed an interim CFO and other relevant subject matter experts to assist our client with its operational and performance improvements.
Background:
Our Client is an acute care medical facility serving the residents of Virginia’s beautiful Shenandoah Valley. While the hospital had a long track record of healthy margins, the President and CEO became concerned when performance declined sharply in the first quarter of 2016. Rather than waiting to see if things would improve, she responded immediately, bringing in Warbird Consulting Partners to analyze the situation, pinpoint underlying issues and execute a plan of attack.
Augusta Health is among the finest community hospitals in America. Our patients receive an exceptional level of care, reassured that their loved ones and visitors have many amenities available within the hospital so they can all be comfortable while staying close during difficult times. Augusta Health opened in 1994 to continue a tradition of personalized care with small-town hospitality that began more than 50 years ago with predecessor hospitals in Staunton and Waynesboro, Virginia. Today, our highly trained physicians and staff use state-of-the-art technology to provide superlative care with warmth and compassion.
Areas of Focus :
The hospital and Warbird agreed there would be “no stone left unturned.” The Warbird consultant, who has more than 30 years’ experience as a healthcare chief financial officer (CFO), worked with our client’s personnel to perform the following:
- A review was completed of every line on the financial statement including supply expenses, services contracts, depreciation expense and labor costs.
- As interim CFO, he worked closely with the hospital chief executive officer and the chief operating officer to quickly develop revenue cycle objectives, establish a budget and assign executive sponsors to each performance improvement initiative. Specific areas within revenue cycle that were focused on included Denials, Quantitative Analysis, Patient Access, Revenue Integrity and Patient Financial Services
- He positively influenced the operational and long-term business culture, helping the hospital teams move from analysis to action and instilling a sense of urgency and confidence to deliver on big promises.
Conclusion:
The results speak for themselves. The organization was at break-even by the end of second quarter 2016, profitable in third and fourth quarters and ended the year with a 3.8% operating margin, substantially better than the 2016 hospital median of 2.21%. Salaries and wages went from 42.8% of net revenue to 39.7%, saving $9 million; and other expenses decreased from 57.5% of net revenue to 56.6%, for $3 million in savings. Annualized savings totaled more than $20 million and exceeded seven percent of operating expenses. Warbird greatly exceeded its guaranteed return on investment for the engagement, delivering significantly more value to the community hospital than what they paid in fees.