ELMHURST – Edward-Elmhurst Health plans to cut an additional $35 million, or 3 percent of its expenses, as stated in an investor update conference call Feb. 23.
The hospital system previously had announced in October 2017 the reduction of its workforce by 234 positions, including 84 current employees who would be laid off and 150 open positions that would not be filled. The layoffs came after the system announced in August 2017 it would be reducing costs by $50 million, including both labor and non-labor expenses, in the following year.
An accounting error overstating the system's accounts receivable by about $92 million also was discovered in an October 2017 audit, system President and CEO Mary Lou Mastro said in the call.
However, Mastro said the $50 million budget cut target was determined prior to the discovery of the accounting error.
Upon the overstatement's discovery, Edward-Elmhurst Health brought in experts to assess the problem, which involved contractual allowances, bad debt and charity care reserves, she said. The problem dated back to before 2012.
Jeff Friant, interim CFO and vice president of finance, said in the call the system, together with the experts, identified it had misinterpreted how its electronic health records vendor handles certain types of transactions relative to accounts. Friant said they also realized the nuances of the system's managed care systems weren't fully loaded into the records vendor.
It also was determined Edward-Elmhurst Health's accounting procedures weren't robust enough to accurately capture additional reserves needed on accounts that were overstated within the vendor, he said.
Following the identification of the problem, Edward-Elmhurst Health received recommendations for improvements from various advisers, Friant said. The system has implemented the highest-priority changes, including fully reserving on any account older than 365 days.
"Our balance sheet metrics are strong, and we believe we will weather this challenge moving forward. ... We will continue to focus on revenue growth and operational improvement efficiencies," Mastro said.