Outsourcing revenue-cycle services is new for resource-laden systems the size of CHI, said Sheryl Skolnick, an analyst with CRT Capital Group. CHI previously handled revenue cycle internally. The deal could represent a change in this philosophy as other larger systems might follow CHI and outsource revenue-cycle operations. “I think they're right that there are many things that hospitals do well,” Skolnick said. “Collecting revenue is not one of the things they particularly do well.”
Mooney's hope is the deal will drum up business, and he said Conifer had similar deals in the works. But unlike the CHI transaction, none of them involves offering a stake in Conifer. Having CHI onboard could also unlock the faith-based, not-for-profit market for Conifer.
Prior to the deal, Conifer provided revenue-cycle services to 100 hospitals, including the 51 hospitals operated by Tenet. Faith-based, not-for-profit facilities made up the majority of the remaining hospitals, Conifer officials said. That includes the eight hospitals of the Sisters of Charity of Leavenworth Health System based in Lenexa, Kan.
When assessing the company's internal handling of revenue cycle, CHI officials felt other matters, including healthcare reform, deserved closer attention.
Besides freeing up resources—some employees involved in revenue cycle handle multiple responsibilities—it was also a matter of improving quality. CHI decided it needed Conifer to reach best-in-class status, said Dean Swindle, CHI's executive vice president of business services and chief financial officer, noting Conifer's success with patient satisfaction and their overall business model. While CHI is doling out responsibility to Conifer, it will retain control of the revenue-cycle services.
Conifer's new board will consist of Mooney and two members each from CHI and Tenet. When asked about the size of CHI's stake in Conifer, Swindle would say only that “ownership is enough to matter. It definitely will keep us focused working with them.”
The transition is expected to take less than two years. Currently, CHI employs 2,500 revenue-cycle employees. About 150 hold leadership positions and will become Conifer employees on July 1. The other CHI employees will join Conifer on Jan. 1, Mooney said.
Mooney said he is keenly aware of the timing of the announcement, coming on the heels of the Minnesota attorney general's critical report about Chicago-based Accretive (See story: "Pushing the limit" April 30, 2012). He said what differentiates Conifer from Accretive is its healthcare provider roots, coming from Dallas-based Tenet. Accretive is more focused on turning a profit, while Conifer takes a more patient-centered approach, Mooney said.
Last week, Accretive said it would convene a panel of experts to set national standards for patient collections. The company named former HHS Secretary Mike Leavitt to chair the panel and said other members would include former CMS Administrator Mark McClellan, former HHS Secretary Donna Shalala and former Sens. Tom Daschle and Bill Frist.