Turnaround of Healthcare Practice Makes Refinancing Work

Tulsa Cancer Institute

Tulsa, Oklahoma

Challenge

  • 50% market share in Tulsa but declining due to increased hospital based competition
  • New $45 million state of the art facility with extensive radiology equipment
  • Three years of losses with current annual EBITDA of a $4 million loss
  • $95 million of debt including $35 million building, $45 million trade creditor who served essentially as working capital lender and $15 million of equipment leases
  • Dysfunctional business management and uniformed and uninvolved physician ownership group

Solution

  • Assumed interim CEO role to lead physicians and employees
  • Improved profitability by reducing physician census and salaries
  • Negotiated key reimbursement contract price improvements
  • Started marketing and physician referral source outreach to stabilize and start to grow patient flow
  • Replaced key managers by a combination of new hires and internal promotions
  • Consolidated facilities and eliminated $2 million of annual costs
  • Developed open communications and engaged employee culture that involved physician owners in all key decisions of the turnaround process
  • Restructured trade supply debt with a 33% reduction in debt and a 4 1/2 year repayment plan at zero interest rate
  • Structured sale lease back of primary facility to deleverage business and to create significant cash reserves to guard against unexpected events
  • Assisted in recruitment of new permanent CEO

Results

  • Annual EBITDA has increases from $4 million loss to $8 million positive
  • Debt has been reduced from $90 million to $40 million
  • $4 million of cash in the bank
  • Business is growing after years of decline
  • New CEO has taken over an exciting business opportunity

Daniel F. Dooley

Dan Dooley, CTP, is a Principal and CEO at MorrisAnderson based out of Chicago. He has a strong national reputation in crisis management, operations improvement, debt refinancing/restructuring and C-level positions. He is a frequent speaker at industry conferences and a regular author for industry periodicals. Dan has served on the Board of Directors of both… Read More

Tim Hogan

Tim Hogan is a Senior Consultant at MorrisAnderson. He is an accomplished healthcare executive with a strong record of achievements in both the payer and provider side of the healthcare delivery system. His core competencies include “hands on” management experience in hospital, clinic and managed care settings allowing for an in-depth and diverse knowledge base.… Read More