Orderly Wind-Down of Teaching Hospital, Transition of Patients, Staff and Residents
Client: A 170-year-old safety net teaching hospital, Level 1 trauma center with 496 beds, approximately 2,500 employees, and more than 500 medical residents and fellows, who cared for an underserved community.
Distinctive Factor: The closure of a safety net hospital and major academic institution and its teaching program in the sixth-most populous city in the United States.
Situation: Due to a lack of liquidity, deteriorating financial conditions, pressure from lenders, reliance on a Medicaid/Medicare payor mix, revenue cycle and operational issues, and a drop in patient volume, the hospital’s owner sought outside expertise to improve the performance of the hospital, fix revenue cycle and operational issues, and explore long-term strategic alternatives.
Engagement: Dreskin served as Interim CEO of the health system and led a healthcare team from a global accounting, tax and business advisory firm. At the same time, he addressed decades of staff distrust in hospital management, under-investment, erosion of payor mix, physician flight, an over-bedded market and lack of capital providers and government agencies willing to invest. Dreskin and his team sought to be inclusive of hospital leadership and gain the trust and support of all internal stakeholder groups – including finance, administration, clinical, care coordination, case management, information technology, operations, and others – to gain institutional knowledge and strategy buy-in.
Dreskin and team pursued numerous strategic options simultaneously to keep the hospital in operation, working in concert with academic affiliate institutions, accreditation bodies, regulatory agencies, city and state elected officials, for a path forward, as well as managing a hostile media environment. Despite these efforts, the decision was made to close the hospital and file for Chapter 11 bankruptcy, ensuring patient safety and enabling an orderly wind-down of operations.
The team created a comprehensive plan to safely shut down the hospital that involved a long list of legal and regulatory compliance issues with complex and challenging tasks, all while balancing creditor needs with patient safety. Dreskin collaborated with other health systems, medical centers/schools for residents and fellows, city and state government officials and other public agencies. The deliberative, stepped approach ensured patient safety, regulatory compliance and continuity of quality care.
Outcome:
- Orderly wind-down of services
- Placement of 500+ orphaned residents and fellows
- Patient safety ensured and individuals successfully placed in local health systems
- Outplacement support for 2500+ employees
- Supported fast-tracked physician credentialing at local health systems
- Preserved maximum value for creditors