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
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.
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