Astria Health and 13 affiliated companies filed for Chapter 11 bankruptcy protection on Monday. Those companies include Astria Regional Medical Center, Astria Sunnyside Hospital and Astria Toppenish Hospital.
The organization says it's filing for bankruptcy in order to "restructure its finances, give it time to replace its existing corporate billing office company with another company and enter into a plan of reorganization with its creditors," according to a news release.
Astria hospitals in Yakima, Toppenish, Sunnyside and Astria Health Centers will stay open and continue to care for patients as usual during the restructuring process, the organization said.
"There is no plan to close facilities," the news release said. "Employee jobs and wages will not be impacted."
Astria Health said it has secured debtor in possession financing to ensure it has sufficient liquidity to maintain patient care and hospital operations.
The organization said it converted to a new Electronic Health Record (EHR) system last year after purchasing two new hospitals. At the time of the conversion, Astria also contracted with a company to manage hospital and health center billing, claims processing and collecting since August 2018.
"They promised accounts receivables would return to pre-transition levels quickly after implementation with minimal negative cashflow impact from the transition," Astria said. "The two parties agreed upon specific performance guarantees . . . that the business office operation has not met."
Astria Health said all three of its hospitals have performed considerably well since purchasing two new ones in September 2017. However, the organization said the amount of processed accounts receivable value trapped in the contracted business office operation has "taken longer to process than agreed upon."
The organization blames the contracted company on a "significant shortfall in cashflow" that has "become severe enough to potentially disrupt the organization's ability to pay for crucial items in a timely manner."
The Chapter 11 process allows all three Astria Health hospitals and health centers to continue to operate, the organization said, by providing a pause with creditors and additional access to capital as it switches to a "more sophisticated business office vendor."
The organization plans to emerge from Chapter 11 bankruptcy protection by the end of 2019.