Health Care Claims Processing Company
SITUATION
A $100 million health care claims processing company was struggling with integration problems for two years following the merger of two companies by an equity investor. The situation continued to deteriorate after a recent acquisition of an India-based BPO and development operation.
CRP was retained to help the Company stabilize the product offering, solidify the customer base, and enact cost reductions and EBITDA improvement. CRP’s involvement made a large impact on the Company and soon an unsolicited acquisition offer was made, increasing the urgency of cost reduction and EBITDA improvement. The Company needed CRP’s help to quickly assess cost reduction opportunities and evaluate the proposed changes for financial impact and probability of success.CRP’S APPROACH
The Company retained CRP to assess the situation because of its operational expertise and knowledge of claims processing. CRP provided a restructuring advisor to focus the implementation of cost reductions and lead the analysis without disrupting ongoing customer relationships and operational requirements.
CRP brought leadership to the finance area by placing an interim CFO in the Company to focus on implementing cost savings, completing the annual budget, completing audit requirements, making management presentations to potential buyers and preparing for the due diligence process. The Company’s two mid-Atlantic U.S. locations and the Indian operation made coordination crucial. CRP worked with the Company’s ownership, legal counsel, investment bankers and audit professionals to complete multiple, high priority projects in a timely fashion.RESULTS
CRP’s focus on fast decision-making and its ability to manage multiple projects allowed the sale to proceed quickly, yielding a satisfactory result for the equity owner. EBITDA improvements include the identification of more than $4 million of previously disregarded revenue opportunities, realized without adding additional staff.
CRP identified several areas where the Company could reduce costs, resulting in $18 million in annual savings. Cost reductions were achieved by:
- Eliminating non-strategic product lines, renegotiating vendor contracts, reducing capital expenditures and focusing on more productive sales efforts
- A more efficient use of offshore real estate, such as the integration of offshore acquisitions
- Streamlining the organization through a more efficient use of internal staff, staff reduction and redesigning the workflow
- Expanding the work-from-home initiative to reduce real estate needs
- Streamlining the software utilization process to reduce training and support costs
In addition to reducing annual costs, CRP completed the annual budget, managed the Company’s response to the buyer’s information requests in due diligence, and allowed the Company to continue normal operations, while increasing productivity and the bottom line.