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Accretive mulls paring back debt collection practices


By Andrew L. Wang, Crain's Chicago Business
Posted: January 18, 2013 - 4:00 pm ET
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Accretive Health, whose alleged strong-arm practices were the target of an investigation by the Minnesota attorney general, is moving to exit the business of collecting severely past-due bills from individual patients.

“It'll just be nice to give people no chance whatsoever to call us a debt collector,” CEO Mary Tolan said this week.

Collecting bills older than a year makes up less than 5 percent of the Chicago-based company's annual revenue of $826 million. The bulk comes from billing insurance companies and government programs on behalf of its mostly nonprofit clients.

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Getting out of collections of so-called dormant debt would not mean Accretive is giving up work securing payments from patients at the time of treatment. Its practices at a Minneapolis-based health system — which included collecting before treatment was given, or while patients were in the hospital — came under fire in April, when Minnesota Attorney General Lori Swanson went public with allegations of harassment by Accretive workers.

Accretive in July settled a lawsuit filed by Ms. Swanson's office, agreeing to pay patients $2.5 million and leave the state for at least two years. The company has admitted no wrongdoing, saying it settled because it wished to put the controversy in the past, Ms. Tolan has said. In May, company executives said they were considering getting out of debt collecting from individual patients.

“We are very close to finalizing that strategy,” she said Wednesday during a meeting with Crain's editorial board. “We have determined that it's a very tiny part of what we do and would not be harmful to our business model if we were to, instead of doing it in our entity, partnering with the typical debt collection agencies that are out there in the landscape. So stay tuned — we'll be making some announcements soon.”

Getting out of that business would not put a significant dent in revenue, according to an internal examination of operations.

“I think it's what the analysis shows,” Ms. Tolan told Crain's.

Accretive will continue to collect shorter-term patient debts where there is a chance of recovery, company representatives said.

The company's revenue cycle management business, which accounts for 95 percent of revenue, uses information technology and Accretive employees embedded in clients' hospitals to ensure that bills are correct and payments are received. The company says it can improve clients' operating margins by 4 to 6 percentage points over the course of a contract.

Collections from individual patients make up only about 5 percent of the payment amount Accretive collected for its health system clients, and yet it created huge headaches for Ms. Tolan, who co-founded the company in 2003 after two decades as a management consultant.

New services focused on cutting costs and improving the quality of care could overtake the revenue cycle management business in five years, she said.

“It's a possibility,” she said.

Accretive made $29.2 million in profit on $826.3 million in revenue in 2011. It is expected to release 2012 financial results in February. The company's stock closed $12.64 a share Wednesday, up 1.4 percent from the day before but well below its 52-week high of $28.46.


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