Focused Behavior Solutions Files for Bankruptcy Citing Reimbursement Delays as Key Cause

Focused Behavior Solutions, an applied behavior analysis (ABA) therapy provider based in Walla Walla, Washington, has filed for Chapter 11 bankruptcy, according to court documents.

The filing documents cited delayed reimbursement payments and high-cost debt as two factors contributing to the organization’s cash flow issues. Prior to the bankruptcy filing, Rachel Pope, the owner and director of Focused Behavior Solutions, took several operational actions in an aim to stabilize the business.

Documents show that the company closed or downsized at least one underperforming location, but the exact details were not disclosed. Pope noted in a statement to the court that high-cost managerial roles were also eliminated and the related administrative responsibilities had been consolidated as well. It also revised billing processes to gain visibility into unsubmitted claims to speed up reimbursement revenue collection.

“[The] financial distress is the result of an unsustainable repayment structure, not a failure of operations or lack of demand,” one document detailed. “Despite its current financial difficulties, the underlying business continues to provide services for which there is ongoing demand and reimbursement.”

Focused Behavior Solutions is in-network with multiple commercial plans and both Washington and Nebraska Medicaid.

Much of the issues have been related to cash-flow timing rather than the absence of Focused Behavior Solutions being a profitable organization, the documents claim.

Behavioral Health Business reached out to Focused Behavior Solutions for comment on this development. The organization has yet to respond. This story may be updated.

Now, Focused Behavior Solutions has begun managing current cash collateral under a strict 20-week budget and has requested authorization from the court overseeing its Chapter 11 case to allow it to access $68,096.43 to process its Oct. 15 payroll for 32 employees.

Daily clinical operations are continuing and unaffected at this time at its three properties: corporate headquarters in Spokane, Washington; its clinic and primary site of business in Walla Walla; and a clinic in Lincoln, Nebraska.  

Per court documents, Focused Behavior Solutions owes $528,898.34 in total debt and liabilities. Of that amount, 42.18% is priority unsecured debt, 24% is nonpriority unsecured debt and 33.7% is secured. Combined, all of its unsecured claims account for 66.27% of the organization’s total debt.  

“The operational changes already implemented, combined with the restructuring of existing liabilities, will allow it to continue operating on a substantially leaner and more sustainable basis,” court documents state. “The purpose of these filings is to restructure debt and to correct the structural issues that contributed to the debtor’s financial distress and establish controls intended to prevent those circumstances from recurring.”

A first-day emergency motions hearing took place on Oct. 15 to plan cash collateral usage, wage payments and bank account management. A meeting of Focused Behavior Solutions’ creditors is set for Nov. 13.

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