One in three rural hospitals may be forced to close their doors in the next decade.2 With guidance from an experienced healthcare financial consulting partner, it doesn’t have to be yours.
While only 83 rural hospitals in the U.S. have closed since 2010,1 nearly 700 more face the same possibility. You know the reasons: lower reimbursements, rising bad debt, worker shortages and competition from newer regional facilities, to name a few. Most likely, you feel the pain of some or all these issues in your own organization.
While business as usual is not an option, many rural hospital executives simply don’t know where to turn for help. They often assume financial consultants are cost-prohibitive, don’t understand healthcare and certainly can’t relate to a small-town hospital’s daily challenges. The truth is, the right financial consultant can help rescue rural hospitals and communities they serve.
Just as hospitals’ problems and needs have changed dramatically in recent years, so has one consulting company’s approach. Warbird Consulting Partners is different because it’s made up of people who have been where you are and faced the same problems you face. Their consultants are former CEOs, CFOs, CIOs, revenue cycle directors, AR managers and other key players in hospitals of all sizes. They know the issues, they speak your language and they know what to do to get you back on track.
Warbird’s other big difference is cost. They know cash-strapped hospitals can’t afford big consulting fees. On performance improvement engagements, they provide flexible pricing options including charging a percentage of the results they deliver. By sharing in the upside, Warbird has skin in the game. If they don’t deliver, you don’t pay.
One in three rural hospitals may be forced to close their doors in the next decade.2 With guidance from an experienced healthcare financial consulting partner, it doesn’t have to be yours.
Contact us today to see how we can help you.
Contact Info
Michael Draa, CEO
404-496-5230
mdraa@warbirdcp.com
Doug Fenstermaker, Senior CFO
404-496-5230
dfenstermaker@warbirdcp.com
[1]Ellison, Ayla. “State-by-state breakdown of 83 rural hospital closures,” Becker’s Hospital CFO Report, January 26, 2018.
[2]“New report indicates 1 in 3 rural hospitals at risk,” National Rural Health Association, February 2, 2016.
“I would highly recommend Warbird to any organization seeking project or comprehensive engagement to improve financial performance,” said the hospital’s CEO. “Their contribution will deliver a positive return on investment and you will have lifelong colleagues who will always be there for you.”
Bankruptcy filings by U.S. hospitals and medical companies more than tripled in 2017, hitting an alarming high in a multiyear trend. Since 2010, Chapter 11 filings by healthcare companies with more than $1 million in assets rose 123%, even as filings in the broader economy fell 58%.1 With the healthcare industry’s financial woes expected to continue, hospital executives know things can go downhill quickly. Many are scrutinizing every corner of their operations to help ensure they survive and thrive.
The president and chief executive officer (CEO) at a mid-Atlantic community hospital proved the efforts pay off. While her hospital had a long track record of healthy margins, she became concerned when performance declined sharply in first quarter 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 action.
The hospital CEO 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), looked at 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 CEO and chief operating officer to quickly develop revenue cycle objectives, establish a budget and assign executive sponsors to each performance improvement initiative. He positively influenced the operational culture, helping hospital teams move from analysis to action and instilling a sense of urgency and confidence to deliver on big promises.
The results speak for themselves. The organization was at breakeven 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%.2 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 met its guaranteed return on investment for the engagement, delivering significantly more value to the community hospital than what they paid in fees.
“I would highly recommend Warbird to any organization seeking project or comprehensive engagement to improve financial performance,” said the hospital’s CEO. “Their contribution will deliver a positive return on investment and you will have lifelong colleagues who will always be there for you.”
Contact us today to see how we can help you.
Contact Info
Michael Draa, CEO
404-496-5230
mdraa@warbirdcp.com
Doug Fenstermaker, Senior CFO
404-496-5230
dfenstermaker@warbirdcp.com
[1]Kary, Tiffany. “Next U.S. Restructuring Epidemic: Health-Care Companies,” Bloomberg, November 27, 2017.
[2]Hospital Medians, Merritt Research Services.
Academic medical centers face unique financial vulnerabilities. The right healthcare consulting partner, like Warbird Consulting Partners, can help them manage these challenges and maintain their status as the centerpieces of the American healthcare system.
Academic medical centers (AMCs) have long been positioned at the top of the healthcare provider pyramid. But behind the prestigious brands and flawless reputations, financial threats loom. Declining reimbursements, narrowing healthcare exchange networks and dwindling research funds are among the market dynamics forcing AMCs to reevaluate their missions and strategies.
As margins shrink, AMCs are trying to shore up performance, exploring everything from simple cost-cutting measures to technology investments to partnerships and acquisitions. Most AMC executives, however, don’t have the bandwidth to lead major operational or revenue cycle initiatives. They’re there to teach and care for patients, not worry about making money. So where can they turn for help?
Business consultants are an option, but they tend to bring a corporate or traditional health system perspective that frankly doesn’t apply to the academic environment. What AMCs need are healthcare experts who understand the culture, governance processes, reimbursement mechanisms, referral flows and other forces unique to academic medical center operations.
Equally important in sizing up healthcare consultants is their hands-on experience. AMCs should look for practitioner consultants who have actually done the work they recommend, whether it’s planning strategy, troubleshooting technology or building spreadsheets.
The final consideration in hiring a healthcare practitioner consultant, of course, is cost. It doesn’t make sense to pay high fees when expense control and margin improvement are primary objectives. A good healthcare consulting firm has the confidence to charge a percentage of the results they deliver. If they don’t turn things around as agreed, the AMC doesn’t pay.
Academic medical centers face unique financial vulnerabilities. The right healthcare consulting partner, like Warbird Consulting Partners, can help them manage these challenges and maintain their status as the centerpieces of the American healthcare system.
Contact us today to see how we can help you.
Contact Info
Michael Draa, CEO
404-496-5230
mdraa@warbirdcp.com
Doug Fenstermaker, Senior CFO
404-496-5230
dfenstermaker@warbirdcp.com
The Warbird approach produced a quick win and ongoing performance improvement. In two short months, the hospital’s denials went down, revenue went up and cash collection improved by $3.2 million with $2.2 million pending.
If you’re feeling pressure from tight margins and sluggish cash flow, you’re not alone. Almost half of rural hospitals lost money in 2017,1 making it tough to manage cash for everything from day-to-day operating expenses to long-term lending requirements and capital plans. Given today’s reimbursement uncertainties, days cash on hand is a critical measure for every hospital.
Many hospitals lack the resources to pinpoint and fix their cash flow problems, putting themselves at financial risk. A smart alternative is to bring in third-party consultants who can objectively assess the situation and implement solutions the hospital can sustain long after the consultants are gone.
A southern U.S. hospital with fewer than 65 beds did just that, hiring Warbird Consulting Partners to help address bad debt, slow cash collection and increased accounts receivable (AR), especially those 90 days and greater. Warbird, whose consultants all have hands-on experience in healthcare finance, revenue cycle and IT, brought in AR specialists to review, correct and resubmit claims to payers to accelerate reimbursement. The Warbird team identified denial trends by payer, type and hospital department to pinpoint root causes and documented denials tracking and appeal processes. Finally, they trained the hospital staff to do the work themselves to sustain positive results.
The Warbird approach produced a quick win and ongoing performance improvement. In two short months, the hospital’s denials went down, revenue went up and cash collection improved by $3.2 million with $2.2 million pending. The denials backlog shrunk, reducing AR inventory by 34.6%. The ratio of project cost versus return, based on $3.2 million, was one to five, proving that regardless of size, hospitals have the potential for a big payback using the right partner and approach.
Contact us today to see how we can help you.
Contact Info
Michael Draa, CEO
404-496-5230
mdraa@warbirdcp.com
Doug Fenstermaker, Senior CFO
404-496-5230
dfenstermaker@warbirdcp.com
[1]“New Data Reveals More Rural Hospitals Losing Money,” The Hospital & Healthsystem Association of Pennsylvania, February 7, 2018.
Within one year, the AMC went from a projected $70 million loss to an estimated $39 million profit and with another $20 million in AR reserves.
While academic medical centers (AMCs) operate differently than typical community health systems, they often face similar reimbursement pressures, rising costs and patient demands for more holistic care. An example of how financial vulnerabilities can affect an AMC and how they can overcome those issues is a multi-hospital system based in the Southeast. The organization is made up of several hospitals including an AMC with 1,100 employed physicians and a school of medicine.
In fiscal year 2014, the AMC faced several operational challenges resulting in a forecasted $70 million loss. To quickly identify and resolve the problems, they hired a new chief operating officer and chief information officer, and brought in an interim chief financial officer (CFO) from Warbird Consulting Partners.
The most pressing revenue cycle issue stemmed from the AMC’s Epic patient accounting system, which was not implemented correctly and did not recognize net revenue accurately. After an accounts receivable (AR) review, they wrote off more than $110 million in net AR dating back to the Epic implementation two years before. To ensure accuracy going forward, the new team reinstalled seven major Epic modules, wrote new policies and procedures and retrained 700 revenue cycle employees.
Reimbursement was another significant pain point for this AMC. Following a thorough analysis, the Warbird interim CFO renegotiated payer contracts to bring reimbursements in line with the complex services provided. He created a separate managed care function, taking it from a one-person function inside the business office to a team with a vice president (VP) and seven additional staff members to support analytics and negotiations. To encourage community hospitals to send patients to their tertiary referral center, executives reviewed patient transfer and scheduling policies to facilitate same-day or next-day appointments with their many specialists.
Finally, the AMC’s new executive team made expense control a high priority. They reviewed all open positions to confirm their necessity and implemented a VP-level review and approval process for all new hires. Every month, each department director reviewed his or her operating and financial performance with their VP, explained variances and presented plans to get back on budget.
Within one year, the AMC went from a projected $70 million loss to an estimated $39 million profit and with another $20 million in AR reserves. A strong focus on operational efficiencies and adapting to the shifting healthcare landscape resulted in this $129 million turnaround on the AMC’s $2.3 billion revenue base.
Contact us today to see how we can help you.
Contact Info
Michael Draa, CEO
404-496-5230
mdraa@warbirdcp.com
Doug Fenstermaker, Senior CFO
404-496-5230
dfenstermaker@warbirdcp.com
With a merger on the line, Centegra Health System navigated financial challenges to put themselves on the path to profitability.
Healthcare mergers and acquisitions are off to their strongest start in more than 10 years,1 continuing a trend shaped largely by value-based, at-risk reimbursement. Providers are bracing themselves for more to come. In a recent survey, more than 70% of respondents said they expect their organizations’ merger, acquisition and partnership activity to increase in the next three years.2
Strategically, a merger can make sense for both parties, provided the financials are in order. That was the case with Illinois’ Centegra Health System and Northwestern Memorial HealthCare when they announced a merger in 2016. But in early 2017, Centegra bore the brunt of a “perfect storm” of a series of simultaneous financial issues. These included opening a new hospital in a suburban area, closing the acute care function in another hospital within the system and the need to accrue more than originally anticipated due to increases in uncompensated care and growth in self-pay patients (a universal phenomenon in the last few years). Needing to make several mid-course corrections quickly, Centegra’s CEO reached out to Warbird Consulting, a financial consulting firm he had engaged in the past for select financial support expertise.
The magnitude of the financial impacts of the “perfect storm” issues was significant. The CEO wanted to take a comprehensive look at broad performance improvements ranging from revenue enhancements to labor productivity, among others, across the total health system. He also wanted his operations executives and directors to drive the process . A Warbird Sr. CFO, teaming with an operations executive from its partner, the CEO Advisory Network (CAN), moved quickly, creating six performance improvement teams led by executives and comprised of vice presidents and directors from across the organization. Warbird and CAN facilitated team activities, helping them form charters, establish financial objectives to make Centegra profitable within two years, and holding them accountable for metrics, decisions and results.
All six of Centegra’s performance improvement teams met weekly and made many major decisions, including reducing staff, outsourcing revenue cycle management and investing in technology. Warbird’s and CAN’s collaborative approach uncovered problems the staff had known about for years but didn’t know how to surface and resolve in a timely fashion.
“This worked for Centegra,” said Mike Eesley, CEO, “because Warbird didn’t tell us what to do. They gave us the structure and process to find the right solutions ourselves.”
Within four months of Warbird’s arrival, performance started turning around. Centegra forecasted a loss for 2018 but is on track to beat that prediction by more than $10 million, as a result of successfully implementing more than $30 million in “real and tracked” economic benefits emanating from the six performance improvement teams. EBIDTA also improved. The “run rate” for sustainable performance improvements is at $4 million per month moving into the next fiscal year. Centegra expects to reach their goal to be profitable in 2019, building Northwestern Medicine’s confidence in Centegra’s performance and their future partnership. In May 2018, Northwestern Medicine announced a joint signature for the definitive agreement to merge by September 1, 2018. That process is now in the planning stages.
Contact us today to see how we can help you.
Contact Info
Michael Draa, CEO
404-496-5230
mdraa@warbirdcp.com
Doug Fenstermaker, Senior CFO
404-496-5230
dfenstermaker@warbirdcp.com
[1]“5 M&A Trends Investors Should Watch in 2018,” Morgan Stanley, February 6, 2018.
[2] Bees, Jonathan.“Mergers, Acquisitions, and Partnerships: Examining Financial and Operational Impact,” HealthLeaders Media, April 1, 2018.
In only three and a half years, Warbird Consulting Partners has built a strong reputation on practitioner-consultants, rapid deployment in time-sensitive situations and relevant subject expertise in every industry we serve. We’ve made our mark in the professional consulting industry and now we’re making our mark permanent with a brand that matches our reputation.
Warbird’s new tagline: Uniquely Qualified. This tagline captures the story of our unique capabilities in the marketplace while also representing our business model and the ability to customize our approach for each client.
The goal was to develop a new company logo that represents the four areas of Warbird: our services, practices, clients and people.
Our Services
Our new logo signifies an abstract and edgy version of a bird in flight. When Warbird was founded at the end of 2011, we began associating ourselves with an American bald eagle. The eagle has characteristics that include the ability to fly at 10,000 feet, laser-sharp focus, and fearlessness. When we begin a project for any client, our first step is to assess the business from a 10,000-foot view and identify the client’s general situation of the issue. Then with laser-sharp focus, we develop solutions to drive results for our clients by looking at everything from processes and procedures to financial documentation. With fearlessness, Warbird attacks each client issue until it’s completely solved and we exceed the client’s expectations.
Our Practices
The three colors of our new logo represent each Warbird practice. The blue hues communicate the similarities of the skill sets between each of our practices, yet they are uniquely serving different industries. Warbird Advisory focuses on companies undergoing significant event-driven change resulting from M&A, restructurings, and capital market events. Warbird Healthcare focuses on senior healthcare finance consulting, information technology (IT) solutions, integrated finance and IT solutions for revenue cycle and interim solutions. Warbird Government Services focuses on finance and accounting assistance, risk management and governance, business operations support and forensic reviews and litigation consulting.
Our Clients
Our focus at all times is on our clients. We strive to offer our clients sustainable solutions and deliver positive growth with unrelenting excellence. Our new logo represents our ability to deliver impactful results for our clients. The bottom piece of our logo represents the foundation of how we deliver, first by listening to the client’s needs and meeting those needs with our niche capabilities. The middle piece of our logo represents the execution of the project; we will always do what is right for our clients when executing a project. The top piece of our logo represents the results from our deliverables. We ensure that our results make a positive impact at the client, whether that’s filling strategic interim role to ease the stress of operational continuity or managing a project to improve overall financial performance.
Our People
Our team is at the core of our business; without people Warbird would simply not exist. The bottom piece of our logo represents the support foundation of the corporate and internal staff. This foundation allows us to efficiently operate our business and maintain client focus. The middle piece of our logo signifies the project management we wrap around every client engagement. Our client relationship managers, delivery management and business development personnel are continuously communicating to clients and consultants to ensure our deliverables are consistent and meet the highest quality level. The top piece of the logo represents our practitioner-consultants in the field. Each consultant is uniquely qualified to deliver the work that is asked of the client and are our greatest ambassadors.
Our new symbol in our brand is an expression of who we are today and where we want to be in the future.
Warbird has landed and we’re here to stay.
Our mission at Warbird is to become known for legendary client relationships, but what does this mean for project consultants and how do we build these relationships? We’ve set up a framework of what legendary client relationships look like and how we can achieve them.
Achieving the status of “legendary” from a client starts with providing authentic expertise and insightful understanding of the client’s unique environment combined with effective execution on the engagement.
When grounded in our technical expertise and strengthened by consistently credible guidance, we are able to maintain exemplary results which produce opportunities to “do it again.”
That’s legendary.
What does it mean to be legendary? For Warbird, it means our clients value our work and approach to the point that we receive both repeat and referral business as a result. When Warbird was formed we talked about how we were going to differentiate our firm over time – this came down to performing in a legendary manner on each engagement and forming legendary client relationships. Becoming legendary is just one way to assess and describe a best-in-class engagement.
When I was an HR consultant, one of the hallmark characteristics of a successful engagement for me was being invited by my client to their annual holiday gathering. If they were pleased with my work I was usually invited.
In our effort to become legendary, help us catalog and benchmark all of the characteristics to gauge whether or not we are achieving our efforts. -Richard Woods, CAO
Serving Our Community
Warbird recently participated in its 5th annual SafeHouse Outreach Backpack-A-Palooza, a backpack giveaway event for children in need. This year Warbird contributed 40 backpacks filled with school supplies to help some deserving high school students headed back to school ready to learn.
Being active in various forms of community service is vital to our organization for many good reasons. One reason is that serving others reminds us, as a professional SERVICES firm, that SERVING the needs of our clients is the mindset and attitude which we must keep firmly in place as we endeavor to help them overcome their challenges and implement the solutions they urgently need. Another reason community service is vital to our organization is to raise awareness within the company about the importance of corporate social responsibility. While we serve our clients throughout the year, it is also important to give back to our community that surrounds us every day.
Sometimes you’re in the right place at the right time meeting the right people.
At Warbird, our consultants are our most valuable assets. Without consultants, we would not exist. This is why developing a professional relationship with a project consultant is vital for everyone in the company, but particularly key for recruiters.
The recruiter/consultant relationship is the glue that holds a consulting company together. There is ample time and effort that is put in to building a base of credibility and trust between the recruiter and project consultant.
Gretchen, a Warbird recruiter for Accounting Advisory, and David, Project Consultant, have known each other for almost 20 years. Gretchen and David met while they were working together as project contractors in 1997. In 2002, Gretchen joined Callaway Partners as a recruiter and began recruiting for the HealthSouth project in 2003 that grew to over 300 consultants. She remembered David and thought he would be a great fit for the job. He joined Callaway Partners as a project consultant in the third wave to go to HealthSouth. [Sidebar: Gretchen was also Mike Draa’s recruiter!] After David rolled off the HealthSouth project three years later, he continued to work for Callaway and Huron on several projects. Over the years, Gretchen and David went their separate ways from Huron. David’s resume was kept in the database through the transition to Warbird; he was recently found to be a great fit for a current project, and almost 20 years later he continues his consulting career with Warbird. Through multiple job changes and taking time off from work, Gretchen and David now are working at the same company once again.
Key Takeaways from Gretchen
- Always be growing your professional network
- Find a common ground with people and build up to credibility and trust
- When you leave an organization, leave it well – no matter how short or long you’re there
- Wherever you go, treat people well because you never know how they will connect to your future
This story is just one example of how relationships become legendary over time. Our mission at Warbird is to serve and become known for legendary client relationships. We should try to exceed this and make all of our professional relationships legendary.