Restructuring Support: Workouts and Bankruptcy

QHR Intensive Resources (QIR) has extensive experience in both hospital turnarounds and the bankruptcy restructuring process. We provide short-term, high-intensity services that help restore hospitals to financial health as quickly as possible, and increase the value of the asset and franchise for the community and other stakeholders.

Financial Restructuring / Workouts

A financial restructuring or workout accomplished consensually outside of bankruptcy court generally is less expensive and less time-consuming than a restructuring under Chapter 11 of the Bankruptcy Code (Chapter 9 for publicly-owned hospitals). Chapter 11 can be a costly process in terms of both monetary and non-monetary resources. A workout typically involves negotiations to restructure bond debt or other secured debt, and may involve efforts to obtain refinancing (or additional financing) and alternate credit terms with vendors.

However, an out-of-court workout lacks some of the advantages of a bankruptcy proceeding. The automatic stay of bankruptcy can provide significant relief to a hospital that is experiencing difficulty managing its cash needs. In addition, suppliers will normally not refuse fulfilling the terms of existing contracts because of pre-petition claims - vendors know they will be paid in full for services rendered while the hospital is in Chapter 11. Once a decision is made to file a bankruptcy petition, the hospital will need assistance cataloging and managing claims, giving notices to creditors, and filing the required bankruptcy schedules.

QIR offers a broad range of support for hospitals considering restructuring options. We also help hospitals considering a bankruptcy filing to carefully choose the attorneys, accountants, and public relations consultants who will be retained.

Chapter 11 Restructuring Support

Based on our extensive experience, hospitals typically need substantial resources to successfully complete the phases of this process. Each bankruptcy is a unique process, requiring a customized approach to achieve a successful outcome.

QHR Intensive Resources (QIR) provides extensive support to hospitals before and during a Chapter 11 filing. 

The following lists the available services from QIR as well as the specific services provided as part of the Chapter 11 filing.

Consulting Services

Oversight and control of the processes by senior level executives with expertise in health care operations, restructuring engagements, and exit strategies. Consulting services most applicable to ongoing operational support (as needed):

  • Clinical Integration
  • Clinical Operations
  • Compliance
  • Managed Care Services
  • Market Analysis
  • Medical Staff Development
  • Physician Practice Consulting
  • Productivity Improvement/Labor Management
  • Public Relations
  • Regulatory/Accreditation Readiness
  • Reimbursement
  • Revenue Cycle Services
  • Service Line Planning
  • Supply Chain
  • Case Management/Clinical Documentation Management
  • Facility Development
  • Health Information Management
  • Human Resources
  • Information Technology
  • Patient Financial Services
  • Patient Throughput (ED/OR)
  • Additional consulting services available

Support Management of Hospital Operations

  • Interim CEO/CFO for ongoing management of the hospital
  • Stabilizing leadership for the community, physicians and employees
  • Continued consulting support for contracted services such as Revenue Cycle and ChargeMaster
  • Service line development

Support Special Relationships with the Bond Trustee and Agents

  • Manage draws on Debtor-in-Possession financing
  • Provide weekly financial information and cash forecasts
  • Broker sale if applicable
  • Report on progress of implementing improvements

Support Through the Sales Process

  • Quantify operational improvements
  • Complete initial draft and finalize Informational Sales Packet
  • Develop and maintain the “Data Room” for access by Potential Suitors (repository of comprehensive hospital data – organizational, statistical, financial, contractual, etc.)
  • Respond to special requests by Potential Suitors
  • Host Potential Suitors on-site
  • Assist with gathering and providing documents to initial due diligence requests and due diligence by the final suitor (if sale is approved by the board and bond holders)

Support Counsel during Chapter 11

  • Address compliance issues as directed by Hospital’s Counsel as part of the exit strategy
  • Prepare various requests by the Bankruptcy Court or Hospital through Hospital’s Counsel (as the bankruptcy counsel)
  • Participate in meetings and conference calls with Creditor’s Legal Counsel
  • Host and provide information to the Ombudsman
  • Complete 13-week cash forecasts
  • Resolve ongoing issues that impact the parties of interest (bondholders and their representatives, potential suitors, etc.)
  • Most importantly, serving as the board’s advocate in conjunction with hospital’s cou

Download the white paper Hospital Bankruptcy - What Board Members Need to Know.