Hospitals Focus on Centralizing Billing

Major for-profit hospitals are becoming more aggressive about consolidating their internal revenue collections operations as they seek to reign in patient debt expense. InsideARM recently examined HCA Corp. and Tenet Healthcare Corp.’s efforts to centralize patient billing and collections operations and the impact the initiatives are having on company results.

Today’s report focuses on HCA’s initiative, which began about seven years ago, said Jeff Prescott, a spokesperson for the company. Since then, HCA has created 12 regional patient account service centers to handle customer accounts in place of the services previously offered at its 179 hospitals. "Rapid document scanning and call center technology made it possible to consolidate the operations," Prescott said. Nashville, Tenn.-based HCA expanded the effort earlier this year and now has 10 centers that process claims, collect and track patient payments, among other things, Prescott said.

“It’s a good model for us,” Prescott said. “We have a lot of hospitals and they’re spread around geographically. We can pull together some of the functions that are common to every hospital and gain economies of scale.  It also has freed up more resources for the hospitals to use for patients.”

Fitch Ratings healthcare analyst Lauren Coste called the for-profit hospital’s centralization efforts “positive” in light of the challenges the industry faces in curtailing patient debt expense.

According to Fitchs’ 2007 second quarter diagnosis of for- profit hospitals, HCA’s bad debt as a percentage of revenue was 11.2 percent in the second quarter, slightly above the industry average of 10.7 percent. The industry’s total uncompensated expense, excluding Tenet and Triad Hospitals Inc., which was purchased by Community Health Systems, Inc. in July, reached 19.3%. Tenet stopped reporting discounts to the uninsured in the first quarter of 2007.

Prescott said the patient service centers have made a difference to HCA’s operations and customer service. The centers’ staff can access patient records quickly to provide faster response to customer inquires. And the centralized setups have helped HCA reduce costs through economies of scale.  

“HCA’s patient service centers are a much broader initiative than bad debt collections,” Prescott said. “They handle all types of back office business functions. I don’t know if you could outsource (those functions).”