Alvarez & Marsal

Challenge: In 2000, Saint Vincent Catholic Medical Centers (SVCMC) was formed through the merger of several Catholic hospitals. But by 2003, the network, which included five acute care hospitals, a home health agency, a comprehensive behavioral health business and several nursing homes, was on the brink of collapse. Facing financial losses of nearly $10 million per month, major underfunded pension obligations of more than $75 million, an estimated $190 million in trade liabilities, and between $80 million and $115 million in trailing medical malpractice liabilities, SVCMC filed for bankruptcy in July 2005.

Approach: Alvarez & Marsal's Healthcare professionals were charged with developing and executing a turnaround plan to save SVCMC, and assumed the roles of interim Chief Executive Officer, interim Chief Financial Officer and Chief Restructuring Officer in November 2005. Working closely with hospital executives, as well as with union and community leaders, A&M quickly stabilized cash flow, increased liquidity, maintained operations, implemented quality controls, overhauled management and governance structures, outsourced information technology functions and third-party revenue cycle collection contracts, and stabilized union relationships. A&M professionals also spearheaded the closure and sale of four money-losing facilities in Brooklyn, Queens and Staten Island, generating new liquidity and reducing middle management costs. Within just 20 months after entering Chapter 11, and only 14 months after hiring A&M, SVCMC filed a consensual plan of reorganization, improved annual cash flow by more than $100 million dollars, achieved positive monthly cash flow of approximately $3 million and was on track to achieve EBITDA of more than $60 million.

Results Achieved: With quality improved across the board, SVCMC emerged from bankruptcy in September 2007, as a smaller, leaner organization with a revitalized balance sheet and a long-term vision focused around a new state-of-the-art hospital.