Yakima Valley health care system files for bankruptcy
The parent company of hospitals in Sunnyside, Toppenish and Yakima has filed for Chapter 11 bankruptcy protection.
Astria Health and 13 related companies, including Astria Sunnyside Hospital, Astria Toppenish Hospital, and Astria Regional Medical Center in Yakima, filed for Chapter 11 protection on May 6 to restructure its finances, give it time to replace its existing corporate billing office company with another company and develop a reorganization plan with its creditors.
Astria pointed to issues after converting to a new electronic health record system last year after buying the Yakima and Toppenish hospitals.
Astria Health contracted with a company to manage the revenue cycle, including business office billing, claims processing and collecting during the conversion.
That firm’s business office has managed the hospitals’ and health centers’ billing, claims processing and collecting since August 2018. It promised accounts receivables would return to pre-transition levels quickly after implementation with minimal negative cash flow impact from the transition, according to an Astria Health news release. The two parties agreed upon specific performance guarantees for accounts receivable and cash collections that the business office operation has not met.
Astria Health has secured debtor in possession financing to ensure it has sufficient liquidity to maintain patient care and hospital operations during the process.
Astria Regional Medical Center, Astria Toppenish Hospital, Astria Sunnyside Hospital and Astria Health Centers will remain open and continue to care for patients as usual as the organization moves through the process.
There is no plan to close facilities. Employee jobs and wages will not be impacted, according to a news release from Astria Health.
“As one of the largest healthcare providers and employers in the Yakima Valley, we believe this step was necessary in order to protect the Valley’s hospitals and its local economies,” said John Gallagher, Astria Health president and chief executive officer, in a news release. “We believe it will protect and sustain the three hospitals for the future. All three hospitals are key community assets badly needed by patients and local communities and are vital to the health and well-being of the towns and cities located throughout the Valley.”
Astria Health’s goal is to emerge from Chapter 11 by year end 2019.