$37M post-merger financial turnaround positions health system for success

A newly formed health system needed assistance in integrating functions and realizing the intended benefits of its merger. Leaders chose Guidehouse to implement a turnaround strategy that strengthened revenue cycle management, increased access, and reduced costs.  

Challenge 

While mergers typically create efficiencies, the integration process can present significant operational and financial challenges if not managed carefully.  

Created by the merger of two legacy organizations, a regional health system found itself facing rising operational costs, deteriorating financial performance, and high debt burden. Leaders recognized that a turnaround was necessary, not only to reduce costs but to set a foundation for the newly formed organization to realize the goals of the merger to increase revenue and enable higher-quality, streamlined care across its region.  

The health system set out to find a partner that could help the new organization refine processes, eliminate redundancies, and create a culture of efficiency among its providers and staff.  
 

Approach  

The health system chose Guidehouse to lead the engagement with a focus on optimizing care delivery processes, reducing claims denials, and finding efficiencies in supply chain, purchased services, and corporate services. Leaders also sought to strengthen physician operations and identify opportunities for revenue enhancement, access expansion, and growth. 

Revenue cycle optimization: Persistent denials were preventing the health system from maximizing yield. Guidehouse sought to prevent denials by redesigning the organization’s revenue cycle operations, developing standardized operating procedures and delivering comprehensive training across the front, middle, and back end of the revenue cycle.  

This included enhanced follow-up processes to improve collections and realignment of revenue cycle staff workflows to prioritize higher-impact accounts. Clinical documentation improvement was also a major part of the initiative, including provider education and improved governance to optimize reimbursement. By standardizing activity codes and implementing performance monitoring tools, the organization achieved ongoing optimization across patient access, billing, coding, and payment follow-up functions. A hands-on, process-driven approach led to measurable improvements in financial performance and operational efficiency. 

Care delivery redesign: The new health system was incurring escalating costs due to inefficiencies following the merger and a heavy reliance on contracted labor. Guidehouse helped leaders restructure the system’s staffing model to better match patient demand and acuity levels and worked with leadership to improve emergency department services, increase throughput, and reduce instances of patients leaving without being seen.  

Through targeted interventions and a data-driven approach, the team successfully improved patient flow, care coordination, capacity management, and discharge planning, ultimately leading to a more efficient and effective healthcare delivery model. 

Physician enterprise and access: Guidehouse partnered with the health system’s medical group to reduce administrative burden and increase ambulatory volumes by streamlining operations. The team standardized appointment types, optimized scheduling templates and panel sizes, and implemented an algorithm to determine new patient capacity for each provider.  

Working closely with the chief medical officer and practice managers, Guidehouse co-developed 30-60-90 day plans to improve access and enhance the provider and patient experience. Additional initiatives included leveraging KPI dashboards to track performance against targets, strengthening referral management to boost specialty care, and recommending more cost-effective contracts for medical directorships, call pay, and hospital-based services such as anesthesia. Collaborating with IT to optimize Epic® tools—including Fast Pass, Tap-in/Tap-out, and pre-visit planning—was critical to sustaining growth and advancing the organization’s access strategy. 

Corporate services, supply chain, and clinical non-labor expense: The organizations collaborated to reduce administrative expenses, analyzing contracts to optimize group purchasing organization contract tiers and renegotiating pricing and terms with prime medical device manufacturers.  

Guidehouse subject matter experts also helped the health system focus on reducing non-labor costs in ancillary departments, including an insourcing of high-volume reference lab tests, which reduced costs and created a new source of revenue. 

Impact 

The turnaround engagement led to a remarkable transformation, driving both operational and financial improvements. During the 12-month engagement, the effort produced remarkable results:  

• Identified over 80 margin improvement initiatives worth $37M annually 
• Implemented $27M in annualized run-rate improvements, including $7.6M from revenue growth and $9.6M from strategic cost savings 
• Realized $17.3M in margin improvement benefits within the first year 

The joint efforts of Guidehouse and health system leaders have set the health system on a path toward sustainable revenue growth, positioning it to continue thriving as additional pipeline initiatives are implemented.