At a time when hospitals are pleading for Congress to help relieve their financial pressures, there is at least one way to find more money without waiting for Washington. In fact, some hospitals are proving that it can be as simple as knowing a patient's apartment number.
The 40-physician cardiology department at New York Weill Cornell Medical Center manages hundreds of delinquent accounts each month, many of which used to go unpaid because they never reached the patient in the first place.
For one of New York City's largest cardiology units, that lost money is no longer a lost cause.
Internet-based services are now making it possible to quickly call up a patient's current address, helping to solve the long-standing problem of losing patient revenue only because invoices were sent to an old or incorrect address.
In most cases, such invoices--after they've been sent to the wrong address and received back in the hospital mail room--are shipped off to collection agencies that follow up for a hefty cut of the revenue they recover.
Finding the patient. Carlos Alonso, senior accounting specialist in Cornell's cardiology department, estimates that he now recovers money from 75% of the patients whose incorrect addresses have been updated. Better yet, he doesn't pay collection fees for the privilege.
In some cases, he says, the address is right except for the apartment number, which is often enough to delay or prevent delivery.
"I do the collections here, and the bottom line is that I have to find this patient and I have to get my money," Alonso says.
When he wants to find a patient whose cardiac-care bill has been returned, Alonso goes to the Internet, punches in the patient's Social Security number, and for about $1.25 per inquiry receives an updated and accurate address.
With the new address in hand, another bill goes out--this time to the correct patient address.
In the first two weeks of this month alone, Alonso received more than 450 returned invoices of the 1,600 he sent out. Before using the Internet-based address verification service, Alonso says, the vast majority of those 450 invoices would have been farmed out to collection agencies, which can charge as much as 25% of the invoice amount to collect.
Good deal. In October, Alonso had 256 returned invoices with amounts of more than $450, or a total of $192,000. Using an Internet-based search firm to find addresses for those patients would have cost about $330. With a collection agency, if he recovered all of the money, the agency would have charged about $45,000.
Another advantage of getting the correct address, Alonso adds, is that once he updates patient accounts with the new data, the hospital's other departments also gain access to that information and can bill for their services as well.
While Alonso could not quantify how much revenue the address-locating service has brought Cornell's cardiology department over the past two years, he points out that early on he was able to recover about $18,000 in a single week.
The average 300-bed hospital can expect to trim $3 million off its bad debt annually using the Web to track down patients' current demographic information, says Lynn DeGrote, vice president and general manager of Search America, a subsidiary of Seattle-based PointShare Corp. and provider of the Internet-based address locator Cornell uses.
In exchange for the address searches, that 300-bed hospital would pay Search America between $25,000 and $50,000, DeGrote says, depending on how its contract is structured.
To use the system, collections personnel log onto Search America's Web site, enter a password, and then provide the patient's Social Security number or telephone number to find an updated address.
Search America gets the addresses from database companies that maintain and regularly update such information, according to DeGrote, who declines to name which companies provide Search America with the data.
For Alonso, getting the address right also means not sending out multiple incorrect invoices, which he estimates cost about $5 each by the time administrative and postage costs are figured in.
Seeking efficiency. "With all the financial constraints hitting hospitals these days, they're looking for every nook and cranny of efficiency they can find," says Anthony Spohn, vice president of risk management for AHA Financial Solutions, the Chicago-based, for-profit subsidiary of the American Hospital Association.
AHA Financial Solutions encourages member hospitals to use credit risk management services provided by Chicago-based TransUnion, a credit-reporting company. About 400 U.S. hospitals now use TransUnion to verify addresses and other information pertinent to tracking down patients who owe money, Spohn says.
TransUnion also recently teamed up with Nashville-based Passport Health Communications, a provider of Internet healthcare transaction services, to help hospitals track down insurance coverage or cash from the patients whose accounts are overdue.
"If you go into a hospital billing office, you're going to see 15% of their invoices are returned in their mail box," says James Lackey, president and chief executive officer of Passport Health. In conjunction with TransUnion, Passport provides its Web-based patient locating service to about 20 hospitals.