Aspen Valley Hospital, located in Aspen, Colo., has signed a five-year deal to continue outsourcing its business process services.
The hospital inked an extension agreement with Falls Church, Va.-based vendor CSC. Financial terms were not disclosed.
Under the new agreement, CSC will continue to provide business office support to AVH, including billing, accounts receivable and third-party claims reconciliation. The hospital signed the original agreement in December 2005 with First Consulting Group, which CSC acquired in January 2008.
Terry Collins, chief financial officer of Aspen Valley Hospital, said AVH profits rose from $2.4 million in 2005 to $10 million in 2008 during the initial contract.
"Our experience in outsourcing our business office functions to CSC has created a massive turnaround that outstrips anything I've seen in my 25 years in hospital administration," said Collins. "As our revenue stream has improved, customer satisfaction related to billing has also increased significantly."
According to Collins, "days cash on hand" rose from 77 in January 2006 to a high of 278 days in October 2008. Collections also improved, he said. Gross days in accounts receivable were reduced from a high of 171 days to a low of 36 days.
AVH's net bad debt write-offs fell from 8.7 percent of revenues to 3.3 percent. In November 2008, Moody's Investor Services affirmed AVH's bond rating of Baa3. Moody's cited one strength of the hospital as "continued growth in liquidity," affirming the increased success of the business office during the past few years.
"AVH saw a major opportunity to improve their processes and transform the way they do business," said Deward Watts, president of CSC's Global Healthcare Sector. AVH was able to greatly improve cash flow and refocus its resources on the patient."