About The Study
- Management Services
Home Care Plus, Inc. (“HCP”) was a 501(c)3 non-profit, community-based visiting nurse home care agency in Milford, CT that is Medicare/Medicaid certified, state-licensed, and nationally accredited by the Joint Commission. It was originally incorporated in 1981 and became affiliated with Milford Hospital in 1985.
HCP employed approximately 100 staff, including nurses, physical therapists, occupational therapists, speech therapists, social workers, home health aides, and administration. HCP’s payor mix was 89% for combined Medicare and Medicare Advantage plans.
HCP had historically been in financial distress and had operated at a loss for over five years, requiring funding from its parent company. Outdated policies, procedures, and practices contributed to the financial condition of the organization. Worsening the situation, in early 2018, HCP converted its electronic medical records and billings to a new provider, resulting in significant delays, causing multiple issues with cash flows and report generation. Due to these operating conditions, the organization experienced high turnover at all levels of the company.
The CEO of the parent company of HCP entered into negotiations with a large regional provider to acquire the health systems assets. However, since HCP was in significant financial distress, the acquirer had excluded HCP from the proposed deal.
When the CEO abruptly resigned, in July 2018, ToneyKorf Partners, LLC (“ToneyKorf”) was retained by the Board of Directors as the Chief Restructuring Officer (“CRO”) and later President and Chief Executive Officer (“CEO”) to evaluate and assess strategic options for the company and its affiliates, including HCP.
Summary of Execution and Results
- Strategic Plan Design, Implementation, Transaction, and Transition
- Evaluated various strategic options, including pursuing a sale of HCP to an interested party or closing the business to stop the cash burn on the parent company and wind down operations.
- Determined that there were interested parties in buying HCP, which was the preferred method of transitioning the business over a closure. However, most interested parties were not aware of the deteriorating financial condition.
- Held various negotiations and led due diligence with Yale New Haven Health to persuade them to include HCP in the Asset Purchase Agreement (APA), resulting in an amendment to the APA to include the stock sale (or member substitution) of HCP with YNHH.
- Financial Stability/Reduction of Liabilities
- Dedicated two resources for Human Resources and Operations to slow the cash burn of HCP and to assist with improving cash management, providing operational oversight, and reducing employee turnover.
- Developed 13-week cash flow forecast and daily reporting.
- Held daily meetings with the billing team to review all open accounts, managed the nurses in real-time to complete required documentation for bills to be processed, and followed-up with payors regarding denied and pending claims.
- Operational efficiency improvements
- Worked with HCP leadership to address employee turnover issues and retain key employees essential to the operational transition of the organization.
- Led and navigated regulatory concerns and surveys.
- Prepared the organization for a merger and integration into a new health system by implementing improved policies and procedures, conducting training on existing IT systems and infrastructure, and educating employees on transition processes.
- Worked with existing vendors on arrears to re-establish terms and ensure medical supply delivery was uninterrupted.
In summary, ToneyKorf was able to stabilize HCP and its workforce and demonstrate a value that ultimately prevented the closure and related costs, saved the jobs of approximately 100 staff, and provided for the continuing care of the patients.