Philadelphia hospital imposes spending cuts after Change Healthcare cyberattack
PHILADELPHIA, UNITED STATES — St. Christopher’s Hospital for Children in North Philadelphia has announced temporary spending restrictions due to cash-flow issues stemming from the recent Change Healthcare cyberattack.
The hospital, which is jointly owned by Tower Health and Drexel University, outlined several strategies to manage its finances during this challenging period.
Impact of Change Healthcare cyberattack
In February, the ransomware group ALPHV targeted Change Healthcare, a subsidiary of UnitedHealth Group, disrupting billing and information systems nationwide.
This attack has significantly delayed insurance collections for many healthcare providers, including St. Christopher’s Hospital, which relies on Change Healthcare for processing medical claims.
Cost-cutting measures implemented
In a letter to hospital leadership, CFO Edward Bleacher II detailed the immediate steps being taken to manage cash flow. These measures include:
- Limiting supply chain spending to essential patient care, life safety, and regulatory requirements.
- Restricting new hiring to direct patient care roles.
- Limiting overtime, agency/contract staff, and new premium pay unless approved by the CFO.
- Deferring capital spending unless it is for direct patient care, life safety, or regulatory requirements.
- Suspending all discretionary spending, such as travel, until January.
“We are managing cash in a very focused manner,” Bleacher wrote. “We anticipate returning to our normal cash-flow status by January.”
Hospital’s financial turnaround
Despite the current challenges, St. Christopher’s Hospital has made significant financial improvements over the past few years.
A coalition of local healthcare organizations previously donated $50 million cash, which, along with government support and philanthropy, has helped the hospital achieve a near-break-even financial status in fiscal 2023.
The hospital posted an operating loss of $97.6 million in fiscal 2021, which narrowed to $10.3 million in fiscal 2022, and a net loss of $534,000 in fiscal 2023.
Commitment to quality care amid financial challenges
St. Christopher’s Hospital emphasized that these temporary spending measures will not impact the quality of care or the safety of patients.
“Like many hospitals across the country, St. Christopher’s has been impacted by the Change Healthcare cyberattack, which has temporarily disrupted our regular insurance collections. To navigate this challenge, we are carefully managing our cash flow to ensure we can continue delivering on our vital community-focused mission,” the hospital stated.
The hospital also remains optimistic about its financial future, with potential benefits from an expanded Philadelphia hospital assessment program that could increase federal Medicaid funding.
Additionally, the hospital has successfully recruited 520 new employees, including 36 new providers, this year alone, helping to meet the strong demand for its services.
