Hospital bill collectors might think of themselves as the Rodney Dangerfields of healthcare finance.
Hospitals are signing complex managed-care contracts at a furious pace, each with multitiered pricing and discounts. Obviously, hospitals need seasoned bill collectors who understand those contracts to keep the cash flowing.
Yet when hospitals merge or reduce their work forces, the business office staff is often the victim of cutbacks.
"These managed-care contracts are quite complex," said Bruce Nelson, vice president of Zimmerman and Associates, a Hales Corner, Wis.-based consulting firm that specializes in accounts receivable.
Work, work, work.Consider these
recent trends from Zimmerman's survey of hospital business offices covering the second quarter of 1994:
Managed care accounted for 12.6% of hospital accounts receivables, a 35% increase compared with the year-ago quarter.
A typical hospital collector is responsible for a staggering 3,750 open accounts, up 23% from the first quarter of 1994. The level of increase in accounts per collector was especially high at hospitals with fewer than 100 beds. For those hospitals, the number of accounts jumped 93% to 3,696 between the first and second quarters of this year.
Zimmerman reports that the increase in open accounts per collector is likely attributable to an increase in patient accounts and staff cuts in hospital business offices.
Not only are there more patient accounts to deal with, but often these new accounts are managed-care contracts, which tend to be more complicated because each contract varies in its payment policies and precertification requirements. In addition, even a single managed-care contract can involve a sophisticated mix of discounts and per-diem payments with a hospital's various network partners, insurers or PPOs.
New relationships.Add to that the new politics of some managed-care contracts. For example, in the past, hospitals could say to a delinquent insurer, "Pay up, or we'll sue."
Now, that's not considered a good business practice. Managed-care contracts are viewed as more of a partnership.
David Dreblow, director of business services for Harbor View Medical Center in San Diego, summed up the managed-care executives' view this way: "Because they have a contractual relationship with the hospital, they feel they have more leverage over the hospital."
And in San Diego, that might be true, he said, adding that estimates show enough hospital capacity in the city to service 4 million residents, rather than the 2.5 million that live there. That makes it a buyer's market for managed-care players.
More than 50% of Harbor View's patient bills are paid by some 100 managed-care plans with which the hospital contracts.
Unlike most hospitals, where collectors have more than 3,000 accounts, Harbor View's collectors have 1,300 open accounts on average. While even that seems like a large number, Mr. Dreblow said about one-third involve balances of less than $100.
Qualifying payers.Douglas Barry, manager of patient accounts at 475-bed Clara Maass Medical Center in Belleville, N.J., said his collectors handle an average of 3,000 open accounts, but he expects that to drop after a recent office restructuring. Mr. Barry joined the hospital three months ago after acting as an accounts receivable consultant.
His office, which has 32 employees, is concentrating more on qualifying patients' payers before the patients are admitted, he said. Rather than simply checking a box on the admitting form to show that the patient has commercial insurance, employees are trained to determine the type of insurance and its particular requirements.
"By tightening up the front end, you eliminate a lot of maintenance on the back end," he said. "So many hospitals operate in the put-out-the-fire approach, but don't take care of the match."
About 30% of Clara Maass' business comes from managed-care contracts, and those contracts require employees to perform certain types of reviews and precertification before and while the patient is in the hospital, he said.
Mr. Barry also noted that technology is important. "You have to go to a paperless system," he said.
Zimmerman's Mr. Nelson acknowledged that a hospital needs the right information systems to stay on top of its accounts receivable, especially managed-care contracts.
"Managed-care contracts can improve reimbursement, but you need the technology to stay on top of it," he said.