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HEALTHCARE
NEWS
Tower Health points to Epic install costs for operating
loss
By Ayla Ellison
T
ower Health reported higher operating
revenues in the first half of fiscal year
2019 than in the same period of the
year prior, but the West Reading, Pa.-based
health system ended the first six months of
the current fiscal year with an operating loss,
according to unaudited financial docu-
ments released Feb. 12.
Tower Health reported revenues of $905.1
million in the six months ended Dec. 31, up
from $729 million in the same period a year
earlier. e increase was largely attributable
to the health system operating more hospi-
tals. Tower Health acquired five hospitals and
their affiliated physician groups from Frank-
lin, Tenn.-based Community Health Systems
in October 2017.
Tower Health said expenses climbed 27 per-
cent year over year to $927.1 million. During
the first half of fiscal 2019, the health system
recorded $7.4 million in one-time expenses
— $4.6 million was related to Epic implemen-
tation costs at the newly acquired hospitals,
and the remainder was related to other one-
time transaction costs. As of Dec. 31, Tower
Health had spent $63 million on the Epic
installation at the five hospitals. e health
system plans to spend another $51 million to
complete the implementation by Aug. 3.
e health system said an unanticipated large
number of denied and delayed claims from
commercial insurers dragged down revenue
and liquidity in the first half of fiscal 2019. Most
of the denied and delayed claims were submit-
ted by the system's five new hospitals, which
continue to operate with a manual EMR system.
"A majority of denials that management is
challenging relate to provider identity, inpa-
tient to observation downgrades and medical
necessity issues, which are automated items
in an Epic environment," state the financial
documents. "Management is addressing this
issue with an implementation of the Epic
EMR at the five new hospitals."
Tower Health's chief revenue cycle officer
has hired a revenue cycle consulting firm to
support the revenue cycle operation at the
five new hospitals, according to the financial
documents.
Tower Health ended the first two quarters of
fiscal 2019 with an operating loss of $21.95
million. e system reported an operating
loss of $1.78 million in the same period of the
year prior.
Aer factoring in a $19.2 million loss on in-
vestments and other nonoperating losses,
Tower Health posted a net loss of $42.9 mil-
lion in the first two quarters of fiscal 2019.
at's compared to the first half of fiscal 2018,
when the health system reported net income
of $111.1 million.
Tower Health has identified cost savings op-
portunities and management is taking several
steps to improve the system's financial picture
in the long term.
"Management has implemented several cor-
rective actions by investing resources to ad-
dress deferred maintenance at the acquired
hospitals, initiated a market positioning and
branding strategy, and developed consum-
er engagement initiatives," state the finan-
cial documents. "In addition, management
continues to pursue review opportunities to
monetize non-core assets, expand philan-
thropy and grants, and explore partnership
opportunities to advance system goals in an
efficient manner." n
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