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Case Studies

Financial Investigation

The external audit firm alerted the board of directors to accounting irregularities related to the CEO's expense reports. The board of directors launched an internal investigation to review the validity and magnitude of the embezzlement. Independent counsel for the board of directors engaged an HMP executive (at a former firm) to conduct an investigation of the alleged wrongdoing.

Issues

  • The CEO had gone AWOL by the time we were engaged and could not be interviewed
  • Nearly all of the records were paper copies and needed to be converted to digital files prior to analysis
  • The authenticity of expense report receipt documentation was questionable
  • Although initially cooperative, we uncovered during the investigation that the CFO appeared to also be embezzling company funds

Approach

  • Conducted interviews with key accounting personnel and internal audit
  • Worked with private investigators to help locate the CFO and his potential assets
  • Reviewed the Company's policies and procedures
  • Developed a protocol for identifying fictitious receipt documentation
  • Examined submitted expense reports compared to receipt documentation for instances of potentially fictitious receipts or missing receipts
  • Reported findings to board of directors

Results

  • The investigation results were submitted to the board of director's counsel for further investigation and proper disposition

Financial Investigation - Reconstruction of Books & Records – Asset Tracing

Investors in an early-stage start-up venture exercised their right to audit clause after the business owner died unexpectedly and other members of management failed to provide timely financial information while asking for additional capital. Counsel for the start-up retained an HMP executive (at a former firm) to investigate the Venture's financial position by reconstructing the books and records and by tracing the Venture's cash inflows and outflows.

Issues

  • Deceased owner had complete control over the books and records with no other personnel involved in the accounting function
  • We received paper bank statements as the only information source to conduct our investigation
  • Investors demanded a short timeline of less than a month for completion of our analysis so they could make decisions regarding additional funding
  • All investors perceived their investments were initially treated as capital or a triggering event had converted their notes to equity. However, there were missing and incomplete agreements for several investors resulting in a disagreement among the investor group.

Approach

  • Analyzed available records and uncovered hundreds of thousands of dollars that appeared to be embezzled by the deceased owner. We also found instances of seemingly personal expenses of the owner were paid directly by the company with no accounting for these amounts and no repayment from the owner.
  • Prepared a sources and uses of funds analysis and determine millions were transferred to a bank account that no one could identify the account holder.
  • Traced investors funds to the venture's bank statements to ensure capital was properly deposited into the Venture's bank accounts and not siphoned off by the owner.

Result

  • We presented our findings to Counsel and the investor group for further investigation and proper disposition

Financial Investigations - Consulting Expert

A staffing agency with over 100 related parties, 170 office locations and more than 250 bank accounts allegedly operated a check kiting scheme which ultimately unraveled leaving creditors unpaid. At a prior firm, an HMP executive investigated the kiting scheme on behalf of Counsel for a creditor with a multi-million-dollar exposure.

Issues

  • Bank accounts held at numerous financial institutions had millions of transactions to review and analyze
  • Thousands of pages of documents produced were highly disorganized
  • The Agency had over 100 related parties, some of which, participated in the scheme. There were previously unidentified parties that we discovered during our investigation
  • Members of management were either indicted by federal authorities or, for the obvious reasons, unwilling to cooperate with the investigation

Approach

  • Analyzed thousands of bank statement records for evidence of the commencement of the scheme
  • Reviewed publicly available information regarding the formation and ownership structure of the Agency and related entities
  • Queried document database for key financial records, including bank statements, financial statements and internally prepared cash schedules
  • Advised Counsel on the potential timing of when the check kiting scheme started

Results

  • A confidential out-of-court settlement was reached prior to trial

Financial Investigations - Cash Flow Analysis

A Professional Employer Organization (PEO) discovered it had withheld but failed to remit nearly $30 million of payroll taxes. At a prior firm, an HMP executive was hired by Counsel to analyze operations, investigate disbursements to owners and related parties, and create a forecast of future excess cash. This forecast would then be used by the PEO to create a proposed repayment plan which would be presented to the IRS for its payroll tax obligations.

Issues

  • The CFO resigned immediately prior to our engagement and refused to answer questions or assist with our analysis. The PEO's accounting staff attempted to help us but had limited knowledge since the CFO historically restricted access to key financial records.
  • Payroll periods were not synchronized with payroll being run nearly daily. This infrequent basis resulted in extensive modeling to forecast future cash inflows and outflows.
  • The unpaid payroll taxes spanned several years with the PEO acquiring defunct competitors during this time.

Approach

  • Created a 13-week cash flow projection which would be used by the PEO to develop a payment plan that could be presented to the IRS
  • Reviewed disbursements to management and related parties to compute potential preference payments
  • Conducted interviews with management and accounting personnel

Results

  • After providing preliminary observations to Counsel and management, the PEO was raided by the Internal Revenue Services for failure to remit payroll taxes.

Alter Ego Analysis - Expert Testimony

A Fortune 500 Company brought suit against a Subcontractor for breach of contract for failure to complete a multi-million-dollar agreement. Through discovery, the Company learned the Subcontractor had several affiliated companies that appeared to operate as a single business with comingled operations. The Subcontractor had transferred funds to the affiliated entities leaving the Subcontractor insolvent. At a prior firm, an HMP executive was engaged to issue an expert report regarding the characteristics of alter ego that were evident at the Subcontractor.

Issues

  • Although there were numerous management agreements between the Subcontractor's affiliated entities, the terms were not enforced and money freely moved among the parties
  • Current audited financial statements for the Subcontractor were not available and the creditability of the internal books and records was questionable

Approach

  • Analyzed the movement of funds from the Subcontractor to the affiliated entities
  • Reviewed publicaly available information regarding the formation and ownership structure of the Subcontractor and affiliated entities
  • Assisted Counsel with the depositions of the CFO and bookkeeper by providing certain questions that commonly indicate alter ego. Their deposition answers were used in our analysis and report
  • Prepared an expert report

Results

  • Favorable settlement of the case before trial which remains confidential

Subject Matter Expert in Commercial Health Insurance Contract Related Matter - Served as Testifying Expert for For-Profit Health System

Upon the completion of the sale of several hospitals as a part of a for-profit health system's exit of the market, one of the nation's largest commercial health insurance carriers retroactively decided that the selling entity should have required the purchasing entity to carry forward the insurer's Facility Participation Agreement (FPA) with the selling entity for the hospitals in question. The insurer aimed to retroactively force the selling entity to pay the difference in price between the two Facility Participation Agreements. HMP was engaged to render expert opinions regarding what is customary in the industry for contracts when mergers and acquisitions take place.

Issues

  • The for-profit selling entity wished to exit a particular market and sold its entities in the given market to a competing not-for-profit entity that operated other facilities in the market
  • Both the selling and the purchasing entities made the insurer aware of the sale and acquisition of said facilities
  • The total amount of differential rates from the seller's FPA to the purchaser's FPA was approximately $11 million for the period in question
  • The underlying information utilized to support the insurer's calculations relied upon only a few key items for the price differential
  • The damages period in question was limited to the timeframe under which contract negotiations were allowed in both FPAs

Approach

  • Obtained and reviewed all data and contracts utilized by the Plaintiff and determined that the data utilized in the Plaintiff's damages calculation was scrubbed based on their proprietary grouper
  • Researched and opined on industry practices regarding the assignment of provider agreements upon the merger or acquisition of healthcare entities
  • Determined that the damages, if any, incurred by the insurer would almost exclusively be due to the ASO client of the insurer and not the insurer itself. The damages calculation also heavily relied upon a subset of passthrough costs as its basis, which were not negotiable
  • Prepared written expert testimony which rebutted the allegations of the Plaintiff and its damages calculation favoring instead that the defendant followed contractual obligations regarding the transfer of contracts and agreements as well as notice to the insurer to that effect

For-Profit Hospital - Damages Expert Regarding a Matter of Tortious Interference by a Hospital Competitor

A premier for-profit hospital associated with a national for-profit hospital company initiated a suit against a competitor in their highly desirable market to recover damages resulting from the tortious interference of the competitor poaching key employed physician practices. Despite non-compete clauses in each of the physician contracts, the competitor convinced the physicians that they would cover legal expenses for breaking this clause even though other options for practicing medicine existed in the physician contracts.

As a result, the Hospital lost key physician practices and market share to a nearby competitor which took several years to recoup with recruitment efforts.

HMP was engaged to determine the damages incurred by the Hospital as a direct result of the loss of the poached physicians through both the net present value of the Hospital and clinic marginal profits lost by the Hospital as a result of the competitor's alleged conduct as well as the net loss in market value or goodwill of the Hospital attributable to the competitor's alleged conduct.

Issues

  • The effects of the patient migration due to the resulting reduction in both clinic visits as well as hospital-based services at the Hospital in question had to be quantified
  • Marginal profits for both the clinics associated with the physicians as well as the Hospital associated with the lost volume also had to be determined
  • The lost patient and physician relationships and resulting need for physician recruitment

Approach

  • Using hospital-provided data as well as HMP Metrics™, HMP performed an objective analysis for a ten-year period to construct a historical profile of both the Hospital in question as well as its competitors in order to be able to trend changes in selected operating indicators
  • Utilizing patient billing files for the patients treated by the named physicians during their term of employment, HMP determined pre- and post-interference patient patterns by clinic visits, outpatient hospital services, and inpatient hospital services for the relevant period. The patient panels for each physician formerly employed by the hospital were documented to have their referral and utilization patterns changed during the relevant period even with accounting for patients that chose to continue utilizing the hospital in question and accounting for other factors like mortality adjustments
  • The documented lost inpatient and outpatient volumes incurred for the Hospital and clinic were input into HMP's statistical model to determine an accurate assessment of lost marginal profit for the average tenure of the named physicians

Home Health ESOP Trust - Expert Testimony Regarding The Due Diligence Performed by the ESOP Trustee in conjunction with the ESOP transaction

Issues

  • A Home Health Company formed an Employee Stock Ownership Plan Trust (ESOP) and a Trustee was appointed to manage the Trust
  • The Trust purchased a significant ownership interest in the Company, financed through a large, internal loan. The purchase price was established by a national valuation firm
  • Within 24 months of the Transaction, the Company's net profits declined significantly, leading to a large decline in the valuation of the Company and the ESOP's shares in it

Approach

  • HMP was engaged to opine on the adequacy of the due diligence performed by the ESOP Trustee in conjunction with the ESOP Transaction, including the assumptions incorporated in the valuation of the Company provided by the national valuation firm
  • HMP reviewed CMS Medicare cost reports for all non-hospital-based home health companies over an 8-year period using its proprietary HMP MetricsTM platform
  • Created and analyzed a historical profile of the Company's operations, and compared standard industry metrics used to evaluate financial and operational performance to state and national peer groups
  • Conducted a detailed assessment of market and policy risk associated with the operations of the Company in the northeast metropolitan area where its revenues were concentrated

Results

  • HMP demonstrated that the Trustee failed to adequately investigate and understand the true nature of the Company's business model, including its risk profile, despite this data being publicly available, leading to an overvaluation of the Company and the ESOP paying significantly above fair market value for the shares it purchased in the Company
  • Case settled favorably out of court

EHR Provider - Expert Testimony Regarding whether Payments by a Bankrupt Health System to an EHR Provider During the Preference Period were made in the Ordinary Course of Business

Issues

  • A General Acute Care Hospital was in payment default under its agreements with the EHR Provider
  • The EHR Provider agreed to the debt repayment plan proposed by the Hospital, including daily and advance payments
  • After the Hospital filed for bankruptcy, the transfers made to the EHR Provider by the Debtor during the Preference Period were questioned

Approach

  • HMP was engaged to provide an opinion on whether the transfers made by the Debtor to the EHR Provider were consistent with industry norms and practices
  • HMP reviewed all agreements, communication concerning the workout process and transfers between the Parties
  • Compared terms of the Forbearance Agreement to those of similarly situated parties

Results

  • HMP opined that all transfers during the Preference Period were made in the normal course of business and were consistent with industry norms
  • Case settled favorably out of court

Government-Owned Hospital - Damages Expert Regarding a Matter of Professional Malpractice by a National Hospital Management Company

A community hospital counter-sued its former management company for gross mismanagement. The Hospital lost critically significant revenue as a result of the former management company's failure to provide management services and leadership consistent with industry standards, and the mismanagement of the Hospital's workforce and revenue cycle operations. HMP was engaged to document the management company's gross negligence and to determine the damages suffered by the hospital as a direct result of the management company's actions.

Issues

  • Former management company failed to adjust operations to accommodate the Hospital's changed circumstances after suffering significant damage during Hurricane Katrina
  • The Hospital suffered critical loss of revenue due to the former management company's mismanagement over subsequent years

Approach

  • HMP prepared detailed benchmarking analysis using HMP Metrics™, comparing the Hospital's performance across a range of metrics to peer groups in the state and nationally across a 10-year period, including those hospitals also impacted by Hurricane Katrina
  • Conducted a detailed analysis of receivables written off due to revenue cycle failures
  • Quantified effects of damage suffered by unimplemented workforce productivity opportunities
  • Reviewed all reports and documentation produced by the former management company's consulting arm

Results

  • Documented several instances of inaction, mismanagement and miscommunication by the management company or its employees to the Hospital's board of directors
  • Demonstrated that deterioration of the Hospital's financial and operational performance was the result of mismanagement and quantified the damages suffered by the Hospital
  • Hospital was awarded a seven-figure settlement by an independent arbitrator

Successful Turnaround of 2 Non-Compliant SNF's

Collaboration by HMP and Pathway Health

HMP and Pathway Health recently collaborated on a turnaround of a 2-SNF system with significant compliance issues (one of the facilities was on CMS' special focus list). One of the facilities was on the federal governments special focus list and facing potential closure. Special focus buildings are considered the poorest performing facilities in the nation.

Issues

  • One facility was named on CMS' special focus list. The special focus list includes facilities which are considered the poorest performing facilities in the nation.
  • The facility was facing potential closure.
  • The second facility had been issued an Immediate Jeopardy ("IJ") by the state.
  • The residents at the second facility were considered at risk for serious harm or death because of a comprehensive break down in infection control that had led to an actual outbreak of disease.
  • Government trust for the ownership group had been deteriorated after years of negative outcomes.

Approach

  • Assessed root cause
  • Developed action plan
  • Trained and mentored front line staff and leadership
  • Developed and implemented systems for obtaining sustainable quality
  • Implemented systems to audit and monitor progress
  • Worked closely with government officials to create confidence and maintain open lines of communication

Results

  • Facility on special focus list avoided closure.
  • Facility was brought into full compliance and graduated off the special focus list
  • The facility with the IJ was brought back to full compliance
  • Trust for the ownership group was restored

Restructuring of a Faith Based Senior Care Organization in Upstate New York

Served as CEO, CFO, COO

A senior care organization located in Central New York, serving more than 6,000 individuals and their families through 22 programs delivered at 19 locations was in a multidimensional crisis of ineffective executive leadership, poor relationships with external stakeholders, and quickly deteriorating financial position. This prompted the Board of Trustees to engage HMP to provide management services to turnaround the operations and to design and implement a stable financial and management platform from which the organization could continue to successfully carry out its mission of service.

Issues

  • Organization suffering from behaviors that inhibited effective roles and relationships between governing boards, executive leadership, staff, and external stakeholders
  • Organization typified by "silo" structure creating fragmentation, lack of communication, duplication of effort, competition, and low trust across operational units
  • Deteriorating financial position signaled by operating losses, poor cash flow, debt burden, lack of access to private capital, and inability to assess real-time financial position
  • Several critical program initiatives threatened

Approach

  • Engaged the governing structure, repaired relationships with strategic external partners, identified and engaged new strategic external partners, and managed executive leadership succession
  • Right sized work force by eliminating redundant middle management positions created by prior SBU corporate designs
  • Reviewed spending patterns, identified and implemented cost controls, restructured and adopted new financial systems
  • Evaluated major program initiatives, allocated necessary resources, and resumed stalled projects and commitments

Results

  • Informed and engaged Board of Trustees providing leadership to the organization
  • Improved relationships with strategic partners
  • Management contracts to operate three other local and regional long-term care facilities, totaling over 500 licensed beds
  • Annual savings of approximately $10m in unnecessary personnel and associated costs
  • De-compartmentalized and streamlined financial, human resource and procurement functions
  • Ability to provide "real time" assessments of financial position, accelerated year end closeout and audit cycles, single audit framework that describes organization as a whole, and year-end audits with no going concerns
  • Reduction in debt/interest burden on operating budget
  • Corporate restructure to provide consistency of bylaws and single line of Board authority
  • Improved EBIDA, days of cash on hand, equity and profit margin.

Restructuring and Sale of Assisted Living Facilities in Alabama & Georgia

Recommended by the SEC and Served as Court Appointed Receiver

In 2017, HMP was recommended by the SEC to oversee 9 Assisted Living and Memory Care facilities in Georgia and Alabama in payment default of bonded debt totaling $63M. Within a year of HMP's appointment all 9 facilities were sold through a court approved stalking horse sales process. Subsequently, HMP was recommended by BOKF, N.A, as indenture trustee, to serve as receiver over 4 SH facilities with bonded debt totaling $33M.

Issues

  • Owner/Operator stopped making debt service payment to indenture trustees
  • Limited reserve funds to fund operations and implement turnaround strategy
  • Staffing levels (e.g., staff turnover, competency)
  • Commingling of funds between separately bonded communities

Approach

  • Review the current situation with the indenture trustee and workout counsel
  • Assemble an appropriate team for the assignment (i.e., legal, accounting)
  • Tour the facility
  • Interview key members of the management, administrator and staff
  • Evaluate current operations and financial performance
  • Prepare a written assessment of the current situation for the indenture trustee and the court
  • Implement plan identified in assessment

Results

Similar Recent or Ongoing Assignments (Bonded Debt Totaling $33M)

  • Court Appointed Receiver for FHR-Yuma Assisted Living Facility, located in Yuma, AZ (Case #:CV2016-017008)
  • Court Appointed Receiver for American Family Services, located in Parksley, VA (Case #: 2:17-cv-00167). AFS owns an Assisted Living Facility and a Skilled Nursing Facility located on a single campus on the Eastern Shore of Virginia
  • Court Appointed Receiver for Decatur ALF Group, LLC located in Alabama (Case #: 5:17-cv-02141-HNJ) Westminster ALFs
  • Court Appointed Receiver for Cullman ALF Group, LLC located in Alabama (Case #: 5:17-cv-02140-AKK) Westminster ALFs

Multi-Hospital System vs. National Insurance Carriers - Expert Testimony and Damages Computation

A large "hub and spoke" multi-system hospital serving residents across a patient service area of more than 23 counties took legal action against four of the largest commercial health insurance carriers in the country. For nearly twenty years, the insurers kept the hub hospital out of network, but not its spoke facilities or any other regional hospital. HMP was engaged to render expert opinions regarding the permanent injury to the provider's financial, operational and reputational status due to the carriers' actions.

Issues

  • Provider excluded for nearly twenty years from a fair opportunity to participate in in the insurer's Preferred Provider Organization (PPO) network, as required by state law.
  • Anticompetitive behavior of the commercial insurers created a tacit oligopoly that excluded the hub hospital from all PPO networks.
  • Exclusion of the hub hospital over such an extended time period resulted in patient migration patterns being permanently altered
  • The Irreversible disruption to patient referral patterns that coupled with lost demand put the hospital on a path of significant financial loss

Approach

  • Use of a proven statistical method, Coarsened Exact Matching ("CEM"), to measure significant changes in patient utilization patterns at the payer level in a defined market
  • Created and prepared a detailed damages calculation that incorporated the CEM results into a complex economic model of the hospital's operational and financial system
  • Leveraged nearly 25 years of Healthcare Cost Report Information System (HCRIS) data as well as 15 years of statewide all-payer data
  • Incorporated detailed audited financial statements and Universal Billing (UB) data collected by the hospital for more than 15 years
  • Conducted a series of statistical and financial analyses to demonstrate the longitudinal, market-wide effects to the hospital as a result of the carrier's actions
  • Computed damages resulting from the carriers' conduct were in excess of $675 million

Results

  • Favorable settlement of the case before trial
  • Hospital was permitted entry into all of the carriers' PPO networks
  • Joint marketing effort on behalf of the hospital and the largest carrier to announce the hospital's status change
  • Analyses conducted for the case held a dual purpose of providing sophisticated, comprehensive financial and operational assessment of the hospital for internal planning and operational improvement

Individual Nursing Homes and Small Healthcare Provider Organizations

HMP has been recommended by a number of large commercial lenders to act as the Trustee or Receiver in the liquidation or sale of financially distressed nursing homes and other similarly-sized healthcare providers. Most of the assignments have involved entities with a market value between $5 and $10 million.

Issues

  • Manager/Operator stopped making debt service
  • Limited reserve funds to fund operations and implement turnaround strategy
  • Staffing levels (e.g., adequacy of medical and nursing staff)
  • Concern of Medicare and Medicaid billing issues

Approach

  • Review the current situation with indenture trustee and their workout counsel
  • Assemble an appropriate team for the assignment (i.e., legal, accounting)
  • Tour the facility
  • Interview key members of the management, medical, and nursing staff
  • Evaluate current operations and financial performance
  • Prepare a written assessment of the current situation for the indenture trustee and the court
  • Implement plan identified in assessment

Results

  • Stabilized organization; conducted sale

Additional Details

  • Northern District of Georgia, Rome Division (case # 05-44617), 114-bed Nursing Home located in Jasper, Texas
  • Northern District of Alabama, Southern Division (case #2:11-cv-01509), 84-bed nursing home located in Reform, Alabama
  • Middle District of Alabama, Eastern Division (case # 3:14-cv-0059), 120-bed nursing home located in Tuskegee, Alabama
    (facility was closed prior to appointment)

Similar Assignment

  • Appointed Bankruptcy Court Examiner for Hidden Acres Manor, Middle District of Tennessee (case # 1:08-bk-11614), 72-bed nursing facility with a 30-unit apartment building located in Mt. Pleasant, TN.

Secured Commercial Lenders to Hospitals and Hospital Systems

HMP has been retained by a number of large commercial lenders to act as their advisor in the workout of secured obligations owed by both investor-owned and not-for-profit hospitals and health systems. These assignments have included debt restructurings, both in and out of bankruptcy.

Deutsche Bank's Home Health Care Services Group

With the Centers for Medicare and Medicaid Services (CMS) proposing to cut home health spending by more than $6 billion over five years, Deutsche Bank's Home Health Care Services Group needed to assess the impact on investor-owned home health provider companies that it tracks for investors. Deutsche Bank enlisted the expertise of HMP to analyze the highly complex proposed changes.

Two Hospital System

A suburban, two hospital system with approximately 300 beds and $200 million in net patient revenue engaged HMP to assist it in the acquisition of two other hospitals operating in its market.

300-Bed Community Hospital

A struggling community hospital, unable to access the capital markets due to outdated and cumbersome tax-exempt bond covenants, engaged HMP to assist it in developing and implementing a strategy to secure sufficient capital to invest in new programs and facilities.

Publicly Traded Hospital System

A publicly-traded shell company, which recently acquired four general acute care hospitals in southern California, chose new independent accountants. The accounting firm was experienced in the audit of publicly traded companies but had never audited a healthcare provider. The new accounting firm engaged HMP to assist it in conducting the initial audit of the company and in preparation and review of the initial SEC Form 10K.

Government Hospital

A county-owned hospital with approximately $100 million in annual revenues defaulted on approximately $50 million in secured debt after becoming embroiled in a medical malpractice scandal involving the surgical implantation of unapproved medical prosthetics in unsuspecting patients. The scope and gravity of the scandal forced the hospital to seek bankruptcy protection so that it would have a forum to address the matter in a structured manner. Before the malpractice scandal, the hospital had a long history of profitable operations.

Behavioral Health Managed Care Company

In the notoriously difficult field of behavioral health managed care (BHMCO), one not-for-profit, provider-owned organization grew into a major player in the Northeast by developing and executing an innovative care management model for behavioral health and developmental disabilities in partnership with government and commercial payers. Eager to reach more patients by expanding nationally, the BHMCO brought in Healthcare Management Partners as its financial and strategic advisor to examine its market position and capital structure and develop a plan for expanding nationally.

Erickson Retirement Communities, INC. (National Senior Campuses)

In the matter of the bankruptcy and ultimate sale of Erickson Retirement Communities, Inc. (ERC), HMP was engaged as financial advisor to National Senior Campuses (NSC), the not-for-profit counterparty at eighteen of the twenty ERC managed communities. At the time of the ERC bankruptcy, the NSC communities had over 22,000 residents and total assets in excess of $4 billion. The NSC communities were located in twelve different states, each with a unique regulatory environment.

Issues

  • NSC was paying ERC over $40 million per year to manage its communities; these contracts represented the most valuable asset in the ERC estate
  • At the time of the ERC bankruptcy, NSC had advanced to ERC over $1.2 billion in "Community Loan Obligations" to fund the continuing construction of twelve NSC communities which were then under development
  • Additionally, three NSC communities had advanced ERC an aggregate of over $600 million in tax-exempt bond proceeds as a purchase deposit to be applied against the ultimate purchase of the real property
  • Excluding amounts owed to the NSC communities, ERC had commercial debt totaling more than $1.2 billion, which was spread across multiple overlapping banking syndicates with a total of 59 separate participants
  • For the twelve NSC communities then under development by ERC, each community's claims were legally subordinated to those of the banks and bond holders. Also, the community's licenses and resident and care agreements were pledged as collateral under its development agreements with ERC
  • The ERC obligations, including "Resident Purchase Refund Rights" could be rejected or modified in a foreclosure or bankruptcy proceeding

Approach

  • HMP terminated and renegotiated management contracts at all NSC communities into 30-day contracts which must be affirmatively renewed each month by each community to be extended for another 30-day period
  • Created an option for an "NSC-Owned Management Company" as an alternative to ERC and secured a commitment from the eighteen community boards of directors to move forward if favorable terms could not be secured in the ERC bankruptcy and sale
  • Met with state regulators and secured commitment for a "resident-centric" approach to any restructuring
  • Developed new master management and development contracts, which would be acceptable to the NSC communities as long-term contracts; this approach was designed to communicate to ERC's creditors and the potential buyers of ERC that the communities would be willing to commit to valuable long-term agreements, provided that they had a prominent role in the process

Results

  • Services were provided during the bankruptcy and sale on an uninterrupted basis for the 22,000 NSC residents
  • NSC was able to dictate the terms of sale of ERC in exchange for entering into ten-year management contracts with the buyer
  • The new contracts included substantial new protections for the communities and their residents, including the right to terminate the agreements if stringent financial performance and employee and resident satisfaction criteria are not met by the new buyer
  • Designed and implemented a new business model for the financing of developing communities, which provides a very specific guarantee of the individual resident's rights under the existing "Residence and Care Agreement" and obligates the developer to provide and repay working capital for the developing community prior to the collection of any cash rents
  • Reinstated all $1.2 billion of the community loan obligations

180-Bed Community Hospital

A financially struggling, rural community hospital operating in competition with another financially successful hospital and unable to access capital markets due to declining demand for patient services engaged HMP to sell the hospital.

General Acute Care Hospital - Expert Testimony in Accounting Malpractice

The hospital brought suit against its former "Big Four" accounting firm for failing to conduct its examination of the hospital's financial statements for three consecutive years in accordance with Generally Accepted Auditing Standards (GAAS).

Issues

  • Valuation of patient accounts receivable had to be determined
  • Accounting treatment and financial statement disclosure of a material subsequent event
  • Required communications to the hospital's board of directors by its independent accountants

Approach

  • HMP reviewed the accounting firm's work papers for the years in question
  • Interviewed members of hospital management
  • Reviewed selected work papers and analysis prepared by the hospital's successor auditors
  • Prepared an expert report, which hospital counsel elected to voluntarily provide to the accounting firm's legal counsel

Results

  • After reviewing HMP's report, the accounting firm requested non-binding mediation, at which a negotiated settlement was promptly reached

National Investor-Owned Long-Term Acute Care Multi-Hospital Company - Internal Medicare Fraud Investigator

During an internal review of the Medicare cost reports for two of its hospitals, the company noted a very unusual and material increase in reported telemetry charges. The increase in telemetry charges resulted in more than a $10 million increased Medicare outlier payments for a single year. HMP was engaged by the hospital's regulatory counsel and asked to review the medical necessity and documentation of the charges to ensure that they would be supported in the event of an audit or review.

Issues

  • The hospitals had both been acquired the preceding year and converted from general acute care to long-term acute care hospitals
  • The charge master in use at the time of the acquisition was not changed when the hospital was converted to an LTACH
  • The hospital rapidly expanded its telemetry capacity during the period in question

Approach

  • HMP engaged a geriatrician and other geriatric clinical experts to assist in the investigation
  • The geriatrician performed a detailed chart audit of 50 randomly selected medical records to evaluate the clinical appropriateness of the use of telemetry
  • HMP performed a 100% review of all patient medical records to determine if telemetry was documented as medically necessary in the medical record
  • HMP then used this information to recalculate the outlier payment to determine the amount (if any) of overpayment
  • HMP determined that the majority of the telemetry charges were either medically unnecessary or not clinically supported in the patient's medical record. HMP further determined that the amount of the telemetry charge was similarly unsupportable on any basis other than as a means to maximize Medicare outlier revenues

Results

  • The information was submitted to hospital counsel for further investigation and proper disposition
  • Documentation issues were reviewed with management to discuss additional training and procedures to ensure strict compliance with documentation requirements

Multi-Hospital Not-for-Profit System - Consulting Expert in Medicare Fraud and Abuse

The heart hospital of a regional multi-hospital system was under government investigation stemming from a qui tam action alleging violations of the anti-kickback statute. The cardiologists on staff were being scheduled time at the diagnostic unit (heart station) based on case volume admitted to the hospital. HMP was asked to review the available information to assess any trends or patterns and advise the hospital and counsel in the course of the litigation and provide expert testimony as needed.

Issues

  • The relator was a former cardiologist who had been terminated by the group
  • The perception of wrong doing was high because for a long period, access to the heart station was mathematically based on the invasive cardiology volume referred to the hospital by individual cardiologists or their group practice
  • Basing coverage of the heart station on volume is not unusual because this assigns the work to the physicians that are most likely to be in the hospital
  • Determination of whether the assignment to the heart station actually changed any cardiologist's hospital referral patterns

Approach

  • HMP obtained a database of admissions for the years in question
  • Using its extensive data mining capabilities, HMP was able to evaluate competitor patterns, compare alternate methods of allocating time at the diagnostic unit, and review the more than 86,000 individual claims

Results

  • The system and the government successfully negotiated a settlement out of court

National Top Ten Medical College - Testifying Expert

In the course of terminating a fifty-year academic affiliation, a prominent hospital system and a medical college were caught in a dispute over the ownership of certain faculty practice, endowment, and research funds held by the parties that totaled more than $150 million. HMP was retained by the medical college to research the source and uses of those funds and opine as to the ownership of each individual fund.

Issues

  • Because of the length of the relationship, many of the funds had little formal documentation governing the ownership of the funds or the distribution of the funds in the event that the relationship was terminated
  • Because a number of the funds had evolved over many years as both parties expanded their respective operations, the source and use of cash flowing through the funds over the years had become difficult to analyze

Approach

  • HMP utilized its accounting knowledge and expertise in the inner workings of hospital finance to determine the flow of funds and ultimately the ownership of those funds
  • Our approach was to "follow the money" to its source and determine what actions generated the funds, what the intent of the payor or donor was, and how the funds were historically accounted for by both parties
  • HMP prepared an expert report and one of its Managing Directors testified for two days and attended all fifteen days of the arbitration proceeding, where he assisted counsel

Results

  • The matter was settled for an undisclosed amount

Creditor's Litigation Trust - Damages Expert Regarding a Matter of Professional Malpractice by a Hospital Turnaround Management Firm

The creditor's litigation trust (the "Trust") for the estate of a bankrupt not-for-profit multi-hospital system (the "System") engaged HMP to provide advice and expert testimony in support of its corporate malpractice litigation against the former turnaround management firm, the members of that firm who served as officers of the System, and the former special bankruptcy counsel to the System.

Issues

  • Determination of whether the turnaround management firm was grossly negligent in the conduct of its responsibilities
  • Determination of whether the parties actively withheld vital information from the System board of directors solely to protect their private economic interests
  • The Trust which was created as part of the approved plan of reorganization in the bankruptcy had limited resources to investigate the matter

Approach

  • HMP reviewed all reports produced by the turnaround firm during its 21-month tenure at the System, including all board and board committee minutes for the period
  • HMP reviewed the work plans executed by the turnaround firm and the resulting written work product to determine if they met with acceptable standards for the professional turnaround management of a complex health care provider
  • HMP worked closely with counsel and the Trust's damages experts to quantify the damages resulting from the defendant's gross negligence

Results

  • The Trust secured an eight-figure, out-of-court settlement with the defendants

Distressed Tax Exempt Bond Fund - Served as Advisor and Investigator

A very large, distressed, tax-exempt bond fund purchased all of the outstanding bonds issued on behalf of a then defunct urban nursing home chain for less than 1.5% of par. The bonds had been issued to finance the purchase of three large nursing homes by a university hospital system. All of the nursing homes were closed within three years of the acquisition. Prior to selling the bonds, the bond trustee had tried unsuccessfully to build a legal case to hold the university hospital system directly responsible for repaying the bonds. HMP was engaged to assist counsel in building a case demonstrating that the university hospital system was directly responsible for the failure of the nursing homes through its gross negligence.

Issues

  • All of the nursing homes had been closed for more than three years at the time HMP was retained
  • Over two million pages of documents that were produced as part of the original suit by the bond trustee were available, but in a highly disorganized manner
  • Each of the homes had been effectively closed by state regulators for failure to meet basic patient care and life safety standards

Approach

  • HMP engaged a geriatrician and other geriatric clinical experts to assist in the investigation
  • HMP staff and legal counsel used multiple methods, including advertisements in the local media, to locate former managers, members of the medical and nursing staffs, state regulators who inspected the facilities, and former patients and members of their families
  • HMP conducted several hundred interviews with former staff, management, patients, and state inspectors to document their perception of conditions within the facilities and the causes for their rapid decline and ultimate failure
  • An HMP Managing Director with extensive experience at the C-Level with both university and multi-hospital health systems closely examined the sponsoring system's direct role in the management and governance of the nursing homes
  • HMP collaborated with counsel to combine the clinical aspects of the facilities' decline with parallel management and governance failures to create a compelling argument as to the specific causes for the facilities' failure

Results

  • The bond fund and the university hospital system reached a settlement out of court that yielded a return in excess of 50% of par

Post-Acquisition Purchase Price Dispute - Arbitrator

The buyer and seller of a new community hospital were unable to reach an amicable settlement of a dispute regarding the purchase price working capital adjustment. The working capital adjustment was to be based on the hospital's audited financial statements and a separate Working Capital Agreement. Rather than rely on an arbitration panel that might not be familiar with the nuances of the hospital industry or hospital accounting issues, both parties chose to have their case heard and decided by HMP.

Issues

  • Valuation of patient accounts receivable had to be calculated
  • Amounts due to Medicare related to overpayment for Medicare Outliers had to be classified on the balance sheet
  • A very large equipment lease had to be reclassified from an operating lease to a capital lease, resulting in a negative impact on reported working capital
  • A long-term note that was in default as of the audit date was improperly classified

Approach

  • Developed a working knowledge of the relevant contracts and agreements
  • Organized the arbitration process, including establishing the calendar for discovery, exchange of expert reports, etc.
  • Ruled on various pre-hearing motions by the parties
  • Presided over a two-day hearing in which both sides presented testimony

Results

  • Based on expert knowledge, HMP rendered a reasoned opinion of the accounting and healthcare industry issues raised by the parties

Not-for-Profit Multi-Hospital System - Damages Expert Regarding a Matter of Professional Malpractice by a Hospital Management Company

A successful multi-hospital system, located entirely in a highly competitive state with no certificate of need (CON) requirements, had initiated a suit against a national hospital management company to recover damages resulting from the management company's gross negligence. Under the prior contract manager's supervision, the system's financial condition had dramatically deteriorated and the system was unable to gain access to long term debt financing to fund a planned hospital expansion in an important and rapidly growing market. As a result, the hospital lost key physician practices and market share to a large, nearby competitor. HMP was engaged to determine the precise amount of operating profits lost as a direct result of the management company's failure to perform.

Issues

  • The effects of the market shift and patient migration due to the resulting lack of capacity at the hospital in question had to be quantified
  • Marginal cost that would have been associated with the lost volume also had to be determined
  • The physicians involved required political sensitivity

Approach

  • Using publicly available data sources, HMP built a database of all inpatient admissions for the entire state for the relevant six-year period
  • Using this database, HMP was able to determine actual patient admission patterns by hospital, physician, payor and DRG
  • Each physician on staff whose admitting patterns were documented to have changed during the relevant period was interviewed by an HMP Managing Director with extensive experience as a hospital CEO to confirm the specific reasons for the change in referral patterns, which were then documented
  • HMP developed a statistical model to establish the mathematical relationship between individual physician's inpatient utilization and outpatient utilization
  • The documented lost inpatient and outpatient volumes by payor were input into HMP's Hospital Operating Model to determine an accurate assessment of lost net patient revenue, marginal cost, and marginal profit for the relevant six-year historical period, as well as projected losses for an additional four years

Results

  • The client secured an eight–figure settlement in compensation for lost operating profits

National Long-Term Care Provider

The nation's largest privately-owned provider of long-term care, with over 200 facilities located in 29 states, engaged HMP to evaluate the economic damages associated with an identified long term pattern of pricing errors for drugs supplied by the company's institutional pharmacy vendor.

Issues

  • The dispute revolved around the interpretation of contract terms, as well as the inconsistent application of those terms across more than 200 nursing homes located in 29 states over an eight-year period
  • Because of the nature of the pharmaceutical business and its complicated pricing structures across state Medicaid programs, the assignment was very data intensive and involved the statistical sampling of millions of individual pharmacy records and a detailed review of those samples
  • The institutional pharmacy had completed numerous acquisitions of small or regional competitors over the relevant period, resulting in many different accounting systems being used

Approach

  • HMP engaged a forensic economist from one of its corporate partners, and together created a new pricing database utilizing the contract terms and the published pharmaceutical pricing per industry guidance
  • Developed a damage calculation using accepted statistical algorithms applied to the new data base

Results

  • The client and its outside counsel successfully negotiated the matter out of court

County Hospital - Damages Expert Regarding a Matter of Professional Malpractice by a National Hospital Management Company

A previously profitable, rural county hospital with approximately $55 million in net patient revenues initiated a suit against a national hospital management company to recover damages resulting from the management company's gross negligence. Under the management company, the hospital's financial condition had dramatically deteriorated to the point that it was ultimately required to seek protection from its creditors and file for bankruptcy. As a result, the hospital lost key physician practices and market share to a nearby competitor. HMP was engaged to document the management company's gross negligence and to determine the precise amount of operating profits lost as a direct result of the management company's failure to perform.

Issues

  • The alleged gross negligence took place over an eight-year period; detailed financial records and models for that period had to be reconstructed
  • The effects of the market shift and patient migration due to the alleged management malpractice had to be quantified
  • The marginal cost and revenues that would have been associated with the lost volume also needed to be determined
  • The hospital had been engaging in very poor revenue cycle management
  • Improper accounting for patient revenues had been alleged
  • There were significant corporate compliance issues associated with physician contracting
  • The political sensitivity of litigation conducted by a public hospital had to be considered

Approach

  • Using HMP Metrics™, HMP built a database of inpatient admissions for the entire state for the relevant eight-year period
  • Using this database, HMP was able to determine actual patient admission patterns by hospital and DRG
  • Each physician on staff whose admitting patterns were documented to have changed during the relevant period was interviewed by an HMP Managing Director with extensive experience as a hospital CEO to confirm the specific reasons for the change in referral patterns, which were then documented
  • HMP developed a statistical model to establish the mathematical relationship between individual physician's inpatient utilization and outpatient utilization
  • A HMP's Hospital Operating Model was used to model financial performance for a ten-year period; the model was loaded with the hospital's actual general ledger and payroll data for the period, and all data was reconciled to the Hospital's audited financial statements
  • The documented lost inpatient and outpatient volumes by payor were input into HMP's Hospital Operating Model to determine an accurate assessment of lost net patient revenue, marginal cost, and marginal profit for the relevant ten-year historical period
  • A ten-year Cash Realization Study was prepared using 100% of all patient bills by payor and matching 100% of patient cash receipts for the bills in question; in total, more than 2,000,000 separate transactions were analyzed
  • All business relationships with and payments to physicians were reviewed for compliance with applicable statutes and regulations

Results

  • We were able to document multiple instances of gross negligence, including alleged corporate compliance problems, material and repeated accounting irregularities, apparent bond fraud, and frequent false communications by the management company or its employees to the hospital's board of directors
  • The client secured an eight figure settlement in compensation for lost operating profits

"Big Four" Accounting Firm - Expert Testimony

A "Big Four" public accounting firm was the named defendant in a certified class action lawsuit filed by the shareholders of a large public hospital management company for allegedly failing to conduct its examination of the company's financial statements in accordance with generally accepted auditing standards (GAAS), in that the audited financial statements failed to adequately disclose alleged overbilling of Medicare by the company. HMP was engaged as the defendant accounting firm's healthcare industry and accounting expert.

Issues

  • The company which was originally named in the suit had already settled the case with the class actors for several hundred million dollars
  • Additionally, the company had made substantial settlement on the same or related issues with CMS and the SEC; these two settlements aggregated almost $1 billion
  • The alleged misconduct by the company took place at more than 100 hospitals over a four-year period
  • The accounting firm was aware of the Medicare reimbursement practices followed by the company and strongly maintained that their presentation in the company's financial statements was in accordance with then existing generally accepted accounting principles (GAAP) for hospitals and healthcare providers

Approach

  • Using publicly available hospital data and HMP's expertise in Medicare reimbursement and hospital finance, HMP developed a proprietary statistical model to analyze more than 50,000 Medicare cost reports filed during an eight-year period to definitively determine if other hospitals or health systems had engaged in Medicare reimbursement strategies similar to those employed by the company
  • Through its statistical modeling, HMP determined that the alleged overbilling of Medicare by the company was in fact commonly practiced by approximately 20% of all hospitals during the relevant period
  • HMP then selected the "Top 200" hospitals that it identified as having practiced the alleged overbilling and examined their audited financial statements, and/or SEC Form 10K in the case of publicly traded hospital management companies, to determine if their independent accountants had treated the matter differently than the company; a total of almost 800 sets of financial statements were examined
  • HMP produced an expert report supporting its findings, including providing a detailed explanation of the applicable Medicare rules and regulations in layman's terms
  • An HMP Managing Director attended the depositions of the plaintiff's experts and was himself examined by plaintiff's counsel

Results

  • Almost 2,000 different hospitals, including some of the best known in the country and many owned by publicly traded hospital management companies, were documented to have practiced the same billing practices as those of the company
  • Of the almost 800 sets of audited financial statements examined by HMP and audited by national accounting firms other than our client, none reported on the matter differently than our client accounting firm
  • During the relevant period, not a single publicly traded hospital management company which participated in like conduct was found to have disclosed the matter differently in its form 10K filed with the SEC
  • The client and its outside counsel successfully negotiated the matter out of court for a fraction of estimated defense costs

Very Large Commercial Lender - Testifying Expert on Asset-Based Lending to Finance the Acquisition and Operation of Nursing Homes

After the verdict and damages had been reached, and without any prior notice, one of the nation's top lenders to healthcare providers was wrongly impleaded as a defendant in a series of Medical Malpractice cases. In said cases, the manager of a nursing home where malpractice had allegedly occurred was a guarantor on loans made by the lender to other nursing homes which had no malpractice allegations against them. The individual jury awards for punitive and compensatory damages ranged from $50 million to over $1.5 billion; in total the lender was at risk for many billions in damages.

Issues

  • The parent company of the guarantor management company owned or managed approximately 230 facilities at its peak
  • The lender provided either real estate or working capital financing for a total of 28 homes (the "Borrowers"), but none of the facilities were the location of the alleged malpractice
  • The total amount lent to the 28 Borrowers never exceeded $55 million and had been repaid in full prior to the lender being aware that any of the malpractice cases in question even existed
  • The Borrowers were in technical default for four of the six years the loans were outstanding
  • During the last four years the loans were outstanding, they were subject to an orderly workout, including the sale of assets; the lender was ultimately paid in full without ever calling on any of the guarantors for payment
  • The Plaintiff alleged that the Lender's actions (accepting repayment of the amounts due, combined with the restrictions imposed by the loan documents and a series of forbearance agreements) constituted "effective management control" of the organization that enabled the Lender to get funds that should have been available to pay the malpractice awards to the injured parties or their families

Approach

  • Obtained all of the loan documents of this very complex loan structure and flow charted each of the loan structures, which illustrated the role of its Borrowers in the larger organization
  • Reviewed all payments received by the lender and determined that they were in accordance with the terms of the loan agreements, were reasonable, and reflected market rates for similar loans in effect at that time
  • Reviewed all of the Plaintiff's pleadings and their expert reports
  • Read or attended more than 40 depositions taken in the case
  • Prepared an expert report which rebutted the allegations of the Plaintiff and its experts

Results

  • After three years and millions of dollars in defense costs, the Lender was successful in securing a summary judgment against the Plaintiff on all counts

Investor Owned Specialty Hospital Company

A chain of two inpatient rehabilitation hospitals in adjoining states defaulted on its debt with a large commercial lender and a privately-held healthcare lender, and was ultimately forced into Chapter XI liquidation. HMP was engaged as CRO in bankruptcy to manage the facilities and conduct the required Section 363 sale.

Texas Nursing Homes

A chain of six skilled nursing facilities defaulted on its debt with a large commercial healthcare lender. The lender engaged HMP to assess the viability of the provider and chart a possible turnaround. Ultimately, the lender foreclosed on the loan and engaged HMP as the turnaround agent.

Issues

  • $2.5 million negative EBITDA due to inefficient staffing and poor operating model
  • Low occupancy due to low patient satisfaction, ineffective marketing, and obsolete physical plants
  • Low morale among nursing staff due to lack of management attention to quality improvement and training
  • Lender was facing a near total loss under the existing conditions

Approach

  • Consolidated two under performing homes in the same market
  • Immediately focused on quality care and staff training
  • Implemented efficient staffing models to reduce costs
  • Developed an effective sales and communications strategy to effectively reach providers in each local market
  • Modernized and improved the physical plant to enhance the resident experience

Results

  • $3.5 million EBITDA improvement
  • Returned all facilities to full accreditation and licensure compliance
  • Facilitated the successful sale of the facilities by the lender

Suburban Not-for-Profit Healthcare System with a Distressed Continuing Care Retirement Community

A small suburban healthcare system with eight operating units, including a general acute care hospital and a 600 resident continuing care retirement community (CCRC) which was under development, was experiencing severe financial distress due to declining patient volumes and an inappropriate capital structure to fund the construction of the CCRC.

Successful Chapter XI Reorganization of a Bankrupt Two-Campus Not-for-Profit Hospital Located in Northern Mississippi

A sole community provider in central Mississippi filed for Chapter 11 protection three months prior to HMP being engaged. HMP was appointed as CRO by the court as the hospital was facing imminent closure.

Acute Hospital Trust, National Health Service (NHS), UK

HMP and its UK affiliate firm, Bolt Partners, were jointly engaged by the Office of the Monitor to conduct the financial and operational turnaround of a complex acute hospital trust with over £500 million in annual turnover. An HMP Managing Director served as CRO for the project.

Complex Not-For-Profit Eldercare Company

Ineffective executive leadership, poor relationships with external stakeholders, and a quickly deteriorating financial position prompted the Board of Directors of a complex provider of eldercare services with over $200 million in annual revenues to engage Healthcare Management Partners to provide turnaround management services.

Post-Acute & Long Term Care Conglomerate (Skilled Nursing, Rehabilitation, Behavioral Healthcare, Home Care & Hospice)

Served as CEO, CFO, COO

A $250+ million revenue, ESOP-owned elder care provider based in Tennessee with 31 skilled nursing facilities, 4 behavioral healthcare hospitals, 10 homecare and 5 hospice branches, in-house pharmacy and rehabilitation, and a growing Nurse Practitioner business. The company was in technical default on its loan covenants, and upon Healthcare Management Partners' arrival it had 8 days' cash on hand and was considering filing for Chapter 11 bankruptcy protection.

Issues

  • Failed installation of a new electronic medical record ("EMR") system resulted in a significant backlog in billing and a subsequent cash crisis
  • Inefficient processes in the Billing Office led to significant numbers of claims timing out (thereby becoming unbillable) and bad debts were increasing
  • Excessive costs in the corporate overhead structure
  • Ineffective executive management with poor teamwork and accountability

Approach

  • Set up a Cash Collections Team which included temporarily repurposing the accounting staff to the Central Billing Office, improving and prioritizing processes and procedures
  • Implemented a significant reduction in overhead cost; staff reduction "at the bedside" was not considered to be a target opportunity
  • Managed the sale of surplus assets including the disposal of 2 non-strategic nursing facilities
  • Instigated company-wide procurement including centralized managed care contract negotiation
  • Engaged with the EMR provider to assess the dysfunctional installation, revise the software, and reinstall the product, facility-by-facility, including extensive retraining of users
  • Implemented a strategic HR function which was absent from the 4,000-employee organization
  • Engaged with the leadership of the organization to improve the culture by encouraging transparency, team work, and working towards a common goal

Results

  • The board unanimously voted to engage HMP as turnaround managers and replaced the C-suite
  • The company went from $6.6 million in operating cash (8 days' cash on hand) to $46.5 million (75 days' cash on hand) within 13 months; only 22% of the cash increase came from asset sales—the remainder was from operational improvement
  • 45% reduction in corporate overhead expense
  • All financial covenants returned to compliance within 6 months of appointment, and the affected loan was refinanced with new lenders on more favorable terms than the original loan
  • Days Accounts Receivable went from 48 to 31, EBITDA margin more than doubled from 6.7% to 15%, bad debt expense as a percentage of patient revenue went from almost 6% to 1.5%, EBITDA in dollars for the 8 months to August went from $11.9 million in 2014 to $28.1 million in 2015