Hospitals’ Bankruptcy Fueled By EMR Complications

Posted on June 7, 2013 I Written By

Anne Zieger is veteran healthcare branding and communications expert with more than 25 years of industry experience. and her commentaries have appeared in dozens of international business publications, including Forbes, Business Week and Information Week. She has also worked extensively healthcare and health IT organizations, including several Fortune 500 companies. She can be reached at @ziegerhealth or www.ziegerhealthcare.com.

In theory, after they get through their growing pains, hospitals should be able to leverage EMRs and new billing systems to improve their financial condition.  In the following case, however, the installation of these new technologies seem to have been the straw that broke the camel’s back.

A group of New York hospitals is $200 million in the red, and owes debts to about 3,000 creditors, a fact which came out in the hospitals’ recent bankruptcy filing. Sound Shore Medical Center of New Rochelle, Mount Vernon Hospital and five related entities have only $159.6 million in assets, according to the Healthcare Renewal blog.

Rather than go out of business completely, the hospitals have found a savior in Montefiore Medical Center, which is offering to buy the group for $54 million plus furniture and equipment.

What’s interesting here isn’t another sad hospital bankruptcy, which are all too common these days, but the reasons for the hospitals’ unfortunate financial condition.

One cause is financial bleeding which began way back in 2006, when the hospitals began seeing falling patient volume and a negative change in their case mix.  In recent times the hospitals have been seeing “significant” losses, negative cash book balances and bills  paid more than 225 days late, the blog notes.

All of that being said, the real kiss of death seems to have come in 2011, when the hospital did an EMR and billing system conversion.  Rather than helping matters, the conversion “caused major delays in billing and cash collection that still haven’t been fully solved” two years later.

I didn’t write this story up to trash EMRs or billing system  upgrades, of course. But it is worth noting that EMR installations aren’t just an expense, they’re a threat to a hospital’s financial well-being if things don’t go well.