Turnaround of Healthcare Practice Makes Refinancing Work
110M
Annual Sales
95M
in Debt
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
