Astria Health CEO John Gallagher said that it is making progress on its goal to emerge from bankruptcy protection by year’s end, the Yakima (Wash.) Herald reported. He again emphasized the “unique situation” that led to the organization filing for chapter 11 protection on May 6. Most health care systems and hospitals are forced into bankruptcy because their expenses or liabilities are far above their revenues and assets, he said. But in Astria’s case, a vendor was unable to collect $75 million in billing claims over nine months, causing a significant hit to cash flow. “We had a positive income statement,” he said. “We had a mechanical issue with our billing and collecting.” Since filing for bankruptcy protection, Astria Health has made progress on its billing and collection through a new revenue cycle vendor, Gallagher said. The improvement in collections has provided Astria Health and its facilities enough cash flow to continue day-to-day operations without having to tap all of the $36 million in debtor-in- possession financing approved by the court, Gallagher said. Most of the financing — approximately $21 million — was used to pay off two creditors, Banner Bank and MidCap Financial Trust. Read more.
For more on hospital and health care insolvencies, be sure to pick up a copy of the ABI Health Care Insolvency Manual, Third Edition from the ABI Bookstore.
