Prior to its early 2019 merger with Western Connecticut Health Network, Health Quest overstated the amount it was owed by patients by an estimated $75 million.
The resulting health system, not-for-profit Nuvance Health, made the announcement in recent fillings with bondholders to explain the delay in releasing its fiscal 2019 financial results as required under its debt agreements. Nuvance said it had enlisted legal and accounting professionals to investigate the matter.
A representative for Nuvance said the health system expects to file its fiscal 2019 financials in August.
Seven-hospital Nuvance reported a $6.4 million operating loss on $567.2 million in revenue in the three months ended Dec. 31, 2019, according to the system's most recent publicly-available financial results. Nuvance projected it would draw $2.4 billion in annual revenue when the merger closed.
In 2018, the year before its April 1, 2019 merger with WCHN, Health Quest reported $180.4 million in patient accounts receivable and just under $1.2 billion in revenue. Nuvance said in a bond filing that Health Quest may need to restate its finances for one or more of the years before 2019 once the investigation is complete.
Nuvance, which serves 1.5 million people in western Connecticut and New York's Hudson Valley, made the revelation in filings with bondholders in February, and has not released updated finances since then.
Moody's Investors Service placed Nuvance's A3 bond rating on review for downgrade after reviewing its finances. Moody's said that issue was compounded by the $75 million receivables write-down and Nuvance's failure to post timely financial statements. The review affects about $857 million worth of debt.
Nuvance's February filing said Dr. John Murphy, the former CEO of WCHN, will remain the CEO of Nuvance. Steven Rosenberg, the former chief financial officer of WCHN, will remain CFO of Nuvance.
The filing did not say whether Robert Friedberg, the former CEO of Health Quest, remains president of Nuvance. A Nuvance spokeswoman declined to clarify.
