Adam Head doesn’t call it a turnaround.
CARTI’s president and CEO said the Little Rock cancer treatment center’s financial improvement for the fiscal year that ended June 30 should be defined as a “transformation. CARTI’s on a new course with a new trajectory.”
CARTI was struggling when Head stepped into the executive office in September 2017. For the fiscal year that ended June 30, 2017, CARTI had an operating loss before depreciation of $5.8 million on net revenue of $166 million. “We knew we needed to make progress and we needed to make progress fast,” Head said.
A year later, CARTI showed an operating net income before depreciation of $529,000 on net revenue of $189.1 million, an increase of 14 percent from the previous year.
Head said the early results indicate positive net income for the first quarter, which ended Sept. 30, and it might surpass what CARTI did during the entire recent fiscal year.
The numbers have improved so much that CARTI is in the process of hiring physicians and is expected to have at least two — and possibly four — additional doctors on staff after January.
“We feel like we need to do that to be able to support the patients that we’re seeing,” Head said.
The nonprofit’s services include medical oncology, radiation oncology, imaging and lab services. During the fiscal year that ended in June, CARTI had more than 90,000 patient visits.
Head said some of the keys to improving CARTI’s books in the last fiscal year involved restructuring to eliminate duplicative support services while making CARTI more efficient for patients. In April, it eliminated 22 positions, with 17 of those occupied. That move was projected to save CARTI $1.4 million annually.
Head also targeted enhancements in the business office, which included making sure all of a patient’s procedures are properly coded to be paid by insurance companies. CARTI’s provisions for uncollectible accounts dropped 36 percent to $3.7 million in the most recent fiscal year.
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Head also focused on CARTI’s referral program to attract more patients, “and not just here at the main cancer center but at all of our 11 locations.”
He said CARTI’s new vision statement is to be the cancer treatment destination. Arkansas ranks near the top of the nation for its high cancer rates and number of cancer deaths annually. Head said that about 7,000 Arkansans will die from cancer this year, while another 16,000 to 18,000 will be newly diagnosed.
“We know that we can provide the best oncology care out there,” Head said. “And we want people to know it.”
CARTI’s more than two dozen physicians also worked with the executive leadership team “with a sense of urgency in getting things done,” Head said.
CARTI also is looking forward to the fall of 2019, when its 24,000-SF CARTI Cancer Center North Little Rock is expected to open. CARTI is leasing the building, which will merge three North Little Rock clinics into the one on Springhill Drive between McCain Boulevard and Interstate 40.
Fitch Revises Outlook
CARTI’s financial improvements didn’t go unnoticed by Fitch Ratings Inc. of Chicago. In July, Fitch revised its rating outlook to stable from negative and kept the BB+ rating on CARTI’s $48.25 million bond, which is secured by a pledge of revenue, a first-mortgage lien and a debt service reserve fund.
A BB rating indicates an “elevated vulnerability to default risk … however, business or financial flexibility exists that supports the servicing of financial commitments,” according to Fitch’s website.
The revision “reflects recent operating improvements achieved through expense controls and continued revenue growth in fiscal years 2017 and 2018,” the Fitch report said.
Fitch said it expects CARTI’s revenue “will continue to grow at an elevated rate” through the current fiscal year “followed by more moderate growth through 2022.” It expects net income will remain close to the break-even point during that period.