Daugh­ters of Char­ity stum­bles on ad­verse payer mix, physi­cian group losses

Modern Healthcare - - REGIONAL NEWS - —Beth Kutscher

Daugh­ters of Char­ity Health Sys­tem, the Los Al­tos Hills, Calif.-based group still search­ing for a buyer af­ter its sale to Prime Health­care Ser­vices un­rav­eled this year, con­tin­ues to face a ten­u­ous fi­nan­cial pic­ture.

The six-hos­pi­tal North­ern Cal­i­for­nia sys­tem warned bond­hold­ers in Novem­ber that it may not be able to con­tinue op­er­at­ing with­out run­ning out of funds. Its lat­est third-quar­ter bal­ance sheet, for the pe­riod ended March 31, showed that Daugh­ters has 20 days of cash on hand, a de­crease from the 32 days it had at the same point last year.

Its largest chal­lenges—which con­trib­uted to a $55.3 mil­lion op­er­at­ing loss in the quar­ter—in­clude an ad­verse payer mix, re­im­burse­ment rate in­creases that were be­low his­tor­i­cal lev­els and losses in its physi­cian net­work, the sys­tem said in its fi­nan­cial fil­ing.

Daugh­ters watched its $843 mil­lion sale to Prime fall apart in March af­ter the On­tario, Calif.-based chain re­fused to ac­cept the lengthy list of con­di­tions im­posed on the deal by Cal­i­for­nia At­tor­ney Gen­eral Ka­mala Har­ris.

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