CarolinaEast Hospital forced to borrow $45 million

Cyberattack on unrelated claims-payer impales cash flow

NEW BERN – Hospital officials were in Raleigh Tuesday afternoon and received a friendly reception from a state agency known as the Local Government Commission, which must first give its blessings before units of government and public authorities (like most hospitals in North Carolina) can take on additional debt.

State Treasurer Dale Folwell conceded the predicament faced by CarolinaEast is highly unusual – triggered by a recent hack of Change Healthcare, which is a ‘claims management vendor’ – a number-crunching intermediary between many of the nation’s health insurance companies and healthcare providers. He also explained the hospital has depleted reserves and a big chunk of investments.

Wondering about the process? – Hospital submits insurance-covered bills to claims management vendor – which in turn submits claims to insurance company for approval – which in turn issues payment … etc. etc. ad infinitum!!

Folwell estimated billions upon billions are now tied up somewhere while Change Healthcare attempts to rid its information technology systems of insidious cyberattack gremlins. In fact, one CarolinaEast financial operative aptly explained the hospital’s plight: “We have submitted more than 16,000 claims for more than a whole month, between Feb. 22 thru March 29, and have received almost nothing.”

The same executive did acknowledge an interim payment from Change Healthcare of approximately $10 million – a drop in the bucket toward the hospital’s daily expenses. Folwell and crew quickly signaled unanimous approval for CarolinaEast to pursue a “$45 million unsecured line of credit to pay for day-to-day operational expenses.”