Dive Brief:
- California-based Alameda Health System, a five-hospital public group, is getting a visit from Concord-based Toyon Associates to see how the health system can come to terms with its expanding $162 million in debt.
- The health system, which owes the money to Alameda County, attributes its losses largely to IT investments gone wrong, including a Soarian EMR system purchased in 2011 and Soarian Financials system implemented in 2013. Glitches in using the financial system, in fact, have led to the system's difficulty in collecting $50 million in billable revenue.
- Regardless of what the auditors conclude, the county does not intend to let the health system keep incurring debt. Alameda County has capped the system's credit line at $195 million.
Dive Insight:
Though it doesn't happen every day, stories are filtering in of hospitals that invested in big-ticket, allegedly top-of-the-line EMRs and financial systems that don't pan out and in some cases, threaten the existence of the facility. Stories are cropping up of other facilities which, like Alameda Health, don't seem to have been able to tame the systems.
For example, at Wake Forest Baptist Medical Center of Winston-Salem, NC, the troubles began last year when the facility had to write off the sky-high costs of its 2012 Epic Systems implementation. The expense, and troubles collecting on the bills that followed, virtually destroyed the hospital financially. Wake Forest Baptist Baptist posted a $56.6 million operating loss in fiscal 2013, and Standard & Poor's later downgraded the facility's credit rating.
Unfortunately, this is one of many similar stories making the news over the last couple of years. Let's hope other late-adopter hospitals learn from mistakes of their peers rather than ending up in dire financial circumstances.
Want to read more? You may enjoy this story about how over half of struggling hospitals' CFOs expect to be fired in the next two years.