A Swiss rehabilitation clinic with 60 beds and 120 employees saw its existence threatened by the consequences of the coronavirus pandemic in 2022. The management team had been decimated by burnouts and redundancies and cash flow was declining due to falling visitor numbers. An investor, who had become a shareholder two years earlier, commissioned the financial expert to lead the clinic out of the liquidity crisis as interim CFO. He was also tasked with developing a strategy to expand the rehabilitation clinic's services to include new activities such as home care, an outpatient treatment center and the opening of a second clinic.
Liquidity crisis and lack of working capital successfully mitigated
At the beginning of the mandate, the interim manager focused on overcoming the serious liquidity crisis. This was because it was already so far advanced that working capital was threatening to run out. In negotiations with the banks, he achieved an increase in the credit lines. In the next step, he prioritized suppliers and negotiated longer payment terms. The reduction or postponement of expenses provided further financial leeway, which ensured liquidity at least in the short term.
Negotiations with the canton and health insurers, the consistent follow-up of unpaid services and a consistent collection procedure also led to a noticeable improvement in liquidity.
Dashboard for financial management (balanced scorecard) introduced
Even early on in the mandate, it became clear that the rehabilitation clinic's financial organization was not sufficiently aligned with the requirements of economic activity. As a first step, the interim manager worked with the accounting team to introduce a reliable monthly financial statement that enabled a report to be prepared for the Board of Directors by the tenth day of each month. He then set about introducing a comprehensive reporting system that included:
- Results reports by area of activity (rehabilitation, outpatient treatments, home care)
- Investment tracking
- Pro-forma balance sheet to calculate profitability
- Projected cash flow plan
- Financial and non-financial key performance indicators (KPIs)
With this true balanced scorecard, the Board of Directors now has a tool to track economic activities in a timely manner.
New department and sector structure developed with its own budgets
In another project to professionalize the finance department, the interim manager developed a budgeting process in consultation with the CEO. He assigned responsibilities for cost centers and cost types to each department head (nursing, hospitality, HR, infrastructure, finance, CEO). He then supported the department heads in preparing their respective budgets and coordinated the distribution of expenses in connection with several departments.
Changing the corporate culture through proactive communication
The new department and sector structure (nursing, HR, hospitality, finance) meant a significant change for managers and staff alike. As a certified expert in organizational development, the interim manager provided intensive support during the introduction of the new corporate culture. In particular, his proactive communication at all levels contributed significantly to the positive perception of the changes. Increased employee responsibility, for example, led to a significant improvement in service quality.
Medium-term financing of the clinic negotiated with banking consortium
After the urgent financial and organizational tasks had been completed, the Board of Directors asked the interim manager to develop a financing structure for the clinic's growth.
In the course of this task, the interim manager first convinced the clinic's shareholders to adjust the structure of the equity loans (originating from the investment fund) and convert the loans at least partially into share capital. The interim manager then examined various financing alternatives. Finally, the Board of Directors commissioned the interim manager to negotiate a genuine partnership model with a consortium of three banks, which secured the medium-term financing.
Project management taken over for the financial side of the clinic expansion
With the positive changes, the rehabilitation clinic was now able to focus on growth projects. The Board of Directors had wanted to double the size of the clinic for several years. The interim manager was tasked with covering the financial side of this important development project. This included, among other things:
- estimating all cost elements
- creating a five-year financial plan
- negotiating with the banks and the owner of the site, to obtain specific bank financing and an acceptable rent for the project
- Financial management and monitoring of the project
Successfully overcoming the crisis and preparing the rehabilitation clinic for growth
The interim manager was able to complete the original three-month mandate to the client's complete satisfaction after several extensions and a total of one and a half years. In the end, he handed over the financial management of the clinic to a younger and less experienced finance director. The interim manager continues to support the Board of Directors as an advisor.
