Success collectors

The situation that awaited Robbie Ratcliff when he took on a leadership position with a 70-employee back office operation of Health Management Associates was grim.

Ratcliff, after he moved from Bethlehem, Pa., arrived at HMA's Venice facility in early 2012. He discovered the office, responsible for billing collection at 18 Florida hospitals owned by Naples-based HMA, was in tatters — inside and out.

It was dirty and old, says Ratcliff, down to dusty windows. It felt like a dungeon, he adds. There was no organizational chart, and few managers in place to be on it even if there was a one. The worst part: The office was $18 million behind in cash collections, a recovery task Ratcliff called daunting.

“We had the perfect storm of everything going wrong,” says Ratcliff. “We had all these fires to put out.”

The first extinguisher was to move the facility from Venice to Sarasota, in an office formerly occupied by accounting and consulting firm Arthur Andersen. The next part was to overhaul the systems, processes and leadership team. The third step was to hire dozens of new employees, to the point where the office now has a payroll of nearly 200 people.

Those moves, orchestrated by Ratcliff, led to a turnaround in collections. The backlog was reversed, and the Sarasota facility now handles more than $1.5 billion in revenues for HMA, which had $5.9 billion in net revenues in 2012.

The Sarasota office, one of four billing centers HMA operates nationwide, also increased its total collection results every month this year, says Ratcliff. HMA, which operates 71 hospitals nationwide, including 23 in Florida and eight on the Gulf Coast, recently agreed to a $7.6 billion buyout deal from Franklin, Tenn.-based Community Health Systems.

Carpets and cubicles
The Sarasota billing collection office, just west of Interstate 75 off Fruitville Road, is the most visible step in the local turnaround. A homebuilder and a financial services firm had most recently occupied the space, Sarasota Commerce Center II. And in taking it over, HMA found the rare Sarasota office split for multiple tenants but with amenities, such as a gym, usually only found in a single-tenant building.

With offices on all three floors, HMA now leases about 58,000 square feet of the 103,000-square-foot building owned by Piedmont Office Realty Trust. Other tenants include Universal Insurance, State Farm Insurance and John Hancock Insurance. The building is about 96% leased, says CBRE agent Anne-Marie Ayers, who leases the property for the landlord. Ayers, citing amenities that attracted HMA, says “this building doesn't stay vacant for long.”

Andersen, before it was indicted in the criminal case against Houston energy conglomerate Enron and subsequently collapsed in 2002, had 800 employees in that building and another one next door. The second building, the Osprey Commerce Center, is the new headquarters for Intertape Polymer Corp., a publicly traded packaging products firm. Intertape leased 28,490 square feet in August. Other tenants in that 83,000-square-foot building include Blue Cross and Blue Shield of Florida. The vacancy rate is 4%, says Lori Hellstrom, an agent with Sarasota-based Osprey Real Estate Services.

But while HMA rolls along in its new home, executives actually considered leaving the region, even Florida, in late 2011.

Sarasota County economic development officials, however, wooed the company to stay in spring 2012. HMA, in return for $400,000 in performance-based incentives from Sarasota County, agreed to add 217 jobs by 2014 at annual wages that exceed the county average.

CareerEdge, a workforce development organization, also offered $100,000 in employee training assistance.

HMA executives expect to surpass 200 local employees by the end of the year and reach nearly 300 by the middle of next year. The firm, in addition to the hiring binge, also invested more than $1.1 million into the former Arthur Andersen facility. Upgrades range from cubicles and carpets to software and technology to new break rooms. A renovated executive administration suite is in the works and, since the space isn't big enough for a cafeteria, Ratcliff arranges for food trucks to come during lunchtime some days.

The company is now proud enough of its facility that it holds regional meetings there, sometimes for chief financial officers from across HMA's hospital portfolio.

Transitional period
It took more than new computers and parking lot tacos, though, to turnaround the crisis situation Ratcliff encountered in Venice in early 2012.

A key decision early on, says Ratcliff, was when he hired some much-needed senior leaders. They came from Oklahoma and Pennsylvania, in addition to Florida. New executives include a financial analyst, a chief operating officer, a human resources executive and a director of training and education. Ratcliff and his team also invested time early on in developing automated procedures. “There were no processes when we got here,” says Ratcliff. “So we created the processes.”

Those processes were especially helpful to specialized departments in the center. For example, the underpaid recovery unit, with 25 employees who go after insurance companies that don't provide full reimbursements, was one area that markedly improved. Ratcliff declines to release specific amounts the department recovered.

Success metrics HMA uses to judge its regional billing centers include the amount of cash an office collects as a percentage of net revenue and how much bad debt it eradicates. Another key metric is how many days an open file sits unpaid in accounts receivables. The Sarasota office ranked No. 1 in that category companywide in the latter part of 2012.

“Our aim is to finish 2013 with even better results,” says Ratcliff. “I have the best accounts receivable team in the business — I would put them up against anyone.”

Ratcliff's progress at the HMA billing office comes during a transitional period for the entire company, given the Community Health Systems acquisition. The HMA board approved the CHS deal Nov 12. The acquisition could close in the first quarter.

Ratcliff is familiar with CHS, having worked there in patient financial management roles for eight years. A 14-year veteran of hospital billing, Ratcliff says one crisis management lesson, learned at both CHS and HMA, stands out: Know every role in the company, and how to do it.

That could translate to just about any industry. But for Ratcliff that means he gets his hands on account files and works them, just like everyone else. He and three other leaders, for instance, worked 14- and 16-hour days in that first month, while the HMA office was still in Venice, to get the problems under control. “Everyone works on accounts here,” says Ratcliff. “That's what we do. That's why we make our numbers.”

Ratcliff is nonetheless glad the Bonefish Grill in Venice has a kitchen open until midnight. Otherwise he and his leadership team wouldn't have had a place to wind down, or eat, after the grueling shifts. Says Ratcliff: “We closed it down a lot of nights.”

Suburban Flight
The near 100% occupancy rates at Sarasota Commerce Center II and the Osprey Commerce Center, about seven miles east of downtown Sarasota, mirrors a national comeback in suburban office space.

The suburban segment, low-rise and mid-rise office complexes built away from urban cores, looked doomed in the recession, according to real estate data firm CoStar. Many companies consolidated offices into downtown locations, the firm says. Suburban vacancy rates surged past 20% and 30% in some markets in the downturn.

But the suburbs are now in recovery mode. Indeed, a recent CoStar study shows that suburban markets have accounted for 87% of total office demand going back to 2012. Markets driving the recovery nationwide are geographically diverse, from Bellevue, Wash., outside Seattle, to Waltham and Watertown, near Boston, to Houston suburbs.

Washington D.C.-based CoStar, in its report, notes that “suburban office absorption tends to perform well during economic booms and recovery periods.”