Astria Health is blaming its bankruptcy on its former electronic health records and billing system vendors, claiming the companies intentionally oversold their services to convince the health system to sign multi-million-dollar contracts.
Sunnyside, Wash.-based Astria made the allegations in its lawsuit filed on Monday against EHR vendor Cerner and its revenue-cycle subsidiary, Cerner RevWorks, in U.S. bankruptcy court. Astria said its cash collection under Cerner dried up so severely, it was forced to declare bankruptcy in 2019 and close its Yakima hospital in 2020.
Astria claims Cerner's systems failed from day one, with all three hospitals "immediately" reporting cash collection problems. Before the conversion to RevWorks, Astria said its collections were 97% of net revenue. Afterward, that dropped to 54%. Astria said Medicare and Medicaid also rejected claims from two of its hospitals after the conversion.
As a result, the health system said it suffered "a significant and catastrophic decline in cash flow from collections on accounts receivable, thereby jeopardizing Astria's ability to continue meeting its obligations to third parties as they came due."
For its part, Kansas City, Missouri-based Cerner said it "categorically" denies Astria's claims and will vigorously defend the company. Chicago-based R1 RCM bought Cerner RevWorks in August 2020. R1 did not respond to a request for comment.
Astria became a health system in September 2017 when the single-hospital system bought two hospitals from Community Health Systems. It had signed the EHR contract with Cerner three months earlier, assuming the CHS deal would close, and signed the revenue-cycle contract with RevWorks in June 2018. Astria claims it agreed to both after aggressive sales pitches from Cerner in which the company misrepresented its products and failed to disclose problems it was having with other providers.
Part of Cerner's promise was that Astria would be better off working with the same vendor for both its EHR and revenue-cycle functions, as Cerner could "fully integrate" clinical data with financial information.
"As Astria would later learn, this statement was false—Cerner's own EHR system did not fully or properly integrate with Cerner's own RevWorks platform," the complaint said.
It was only after signing the contract that Astria said it learned about news reports and lawsuits regarding serious issues with Cerner's EHR and billing platforms. The complaint lists six examples, including Trinity Health in North Dakota, Agnesian Healthcare in Wisconsin, Medical Center Health System in Texas, Tulare Regional Medical Center in California, Banner Health in Arizona and Glen Falls Hospital in New York.
"Had Cerner told Astria about these issues, Astria would never have contracted with Cerner for the RevWorks product," the complaint said.
Astria filed for bankruptcy in May 2019 and said it had to close its 214-bed Astria Regional Medical Center in January 2020 because of the cash collection issues. Shortly after the bankruptcy filing, Cerner tried to get the court to compel payment on its contract with Astria, and tried to bring the matter to arbitration in November 2020, according to the complaint. The court denied Cerner's arbitration motion. The dispute eventually culminated in Astria's lawsuit.
Astria is accusing Cerner and RevWorks of fraud, negligent misrepresentation, gross negligence and breach of contract. The system is asking the court to void any future payments to Cerner and reject Cerner's request for payments as a creditor in the bankruptcy case. It also seeks to recover certain payments made to Cerner and triple the amount of damages awarded because of Cerner's alleged "knowing violations" of Washington's Consumer Protection Act.
