Hospitals are used to being wholesalers in a business that is going retail. While an HCA subsidiary is selling collection services on those retail accounts to other hospitals, a startup is borrowing an idea from the retail credit industry by creating a healthcare credit score. Its backers include Tenet Healthcare Corp.
Hospitals know how to collect from government programs and commercial insurers, but they have not developed the analytical tools that would allow them to handle individual patient accounts better, said Kirk Gorman, senior vice president and chief financial officer of seven-hospital Jefferson Health System, Radnor, Pa.
Gorman is looking for help from the startup company, which marries hospital financial experience with the leading credit-scoring companys technology and experts.
Healthcare Analytics, Waltham, Mass., is gathering data from hospital systems across the country to develop a healthcare-specific tool for judging whether patients are likely to pay some or all of their bill or whether the hospital should just write off the account, said Stephen Farber, chairman and chief executive officer of the company. The company is still in its research-and-development phase, in which it hopes to collect patient billing data from hospital systems with $100 billion in net revenue annually, he said. Jefferson is one of the systems that has signed on as a data contributor, Gorman said.
Farber was CFO of Dallas-based Tenet from late 2002 to March 2005. Tenet has invested $10 million in Healthcare Analytics and is contributing data to its efforts. Healthcare Analytics also is backed by North Bridge Venture Partners, also in Waltham. Its portfolio companies in healthcare technology include NaviMedix, which connects physicians with hospitals, and NotifyMD, which provides call-center services to providers.
Fair Isaac Corp., Minneapolis, is another partner. Healthcare Analytics has an exclusive contract to adapt Fair Isaacs credit-scoring technology to healthcare, and the two partners are working to develop a tool called medFICO, or a healthcare-specific version of Fair Isaacs FICO scoring system, Farber said. It is expected to be available in summer 2008.
Hospitals today rely on standard consumer credit reports, but these typically cover only 60% of self-pay patients, Farber said. Hospitals dont report to credit bureaus as a matter of practice, Farber said. Theres almost no meaningful healthcare collection data in credit bureau files. Healthcare Analytics expects medFICO to provide guidance on more than 90% of self-pay patients, Farber said.
What we really want to do is create standards that are based in fact and analysis, that are rigorously tested so that hospitals can make informed decisions on managing individual patient accounts, Farber said. Everyone we talk to is just desperate for some sort of standard.
Gorman agreed. A lot of hospital guys, us included, feel like were not fully equipped on how to make those trade-offs, how to allocate resources, Gorman said. Were convinced that we need a more knowledge-based approach to this than we can do on our own.