Washington State Health System cites EHR and Revenue Cycle as key factors leading to bankruptcy

May 28, 2019

Astria Health, based in Washington state has filed for Chapter 11 bankruptcy, laying blame on issues with their EHR and with an outside contracted Revenue Cycle provider.  According to the Yakima Herald-Republic, in the months leading up to the filing the three-hospital system cut several programs and tightly managed their supply chain in an attempt to stabilize their finances.  Nonetheless, their contracted Revenue Cycle vendor allegedly did not process a number of the Accounts Receivables resulting in the cash shortfall that led to the filing. 

EHC NOTE: In another story of financial woe, this small system was apparently hit by a double whammy – EHR problems and poor revenue cycle performance.  While the problems cited were hospital-wide, both issues can impact Anesthesia and OR financial performance either individually or together. With the rapid adoption of EHR systems, we have seen many peri-operative challenges with case scheduling, time estimation, and the learning curve with preoperative documentation by both nurses and physicians.  These challenges can lead to decreased surgical volume over the course of several months during the transition. Since the OR usually drives hospital financial performance, any disruption in case volume can tip a facility or system over the financial edge. Any reduction in volume will of course directly impact the cash flow of the anesthesia group as well.

Likewise, Revenue Cycle performance is a major risk factor for both OR and Anesthesia leaders.  The inability to convert the services delivered into cash is a major risk factor for any business, and no different in our perioperative world. Revenue cycle performance must be understood and tracked on an ongoing basis whether it is performed internally or outsourced.

With hospital and anesthesia group finances under attack on many fronts, vigilance must be maintained to address risk factors such as those discussed in this article. We suggest that OR and Anesthesia leadership teams recognize the pitfalls of an EHR transition and create a plan to identify and mitigate the risks and financial fallout.  Separately, revenue cycle performance – for both the OR and Anesthesia – should always be monitored, with Key Process Indicators identified and tracked pro-actively.