The Community Health Organization is one of the nation’s largest federally-qualified health care organizations providing primary care, specialty services and social services to more than 215,000 patients in the Midwest. 

The Organization’s mission is to provide “home health care” for the medically underserved, low income and uninsured patients.

The Organization started to experience operating losses and tight liquidity due to the following:

–Costs associated with outsourcing the revenue cycle;

–Decrease in patient encounters and managed care lives, 4% and 2%, respectively;

–Costs incurred from implementing a state-of-the-art software system designed to integrate accounting, patient billing and electronic medical records; and

–Collectability of accounts receivable.

As a result of the Organization’s financial performance, their senior lender restricted management from borrowing under its line of credit facility.

Fort Dearborn (FDP) was retained to review the Organization’s financial forecast and assist management in accessing its existing line of credit facility with the goal of refinancing with a new senior lender.  As part of the process, FDP performed the following:

–A deep dive understanding of the Organization’s operations, changes in reimbursement rates, information system conversion and other regulatory matters; 

–Developed a financial forecast that incorporated expected changes to the business as well as management’s and Fort Dearborn’s profit improvement initiatives; and

Analyzed accounts receivable and estimated uncollectible balances and its impact on profitability, EBITDA and debt service

Based on Fort Dearborn’s assessment of the Organization’s financial position and trusted relationship with the Organization’s lender, the Organization obtained limited availability under its existing line of credit prior to their refinancing.

The Organization successfully refinanced its senior debt with a new financial institution with a structure and amortization period better suited to its needs.