HMA’s Uninsured Patient Screening Hurt Insured Admissions: Analyst

Hospital operator Health Management Associates’ (NYSE: HMA) aggressive efforts to curb non-emergency treatment of uninsured patients may have had the unintended effect of chasing away certain insured patients, a Fitch Ratings analyst said.

HMA has been one of the leaders in implementing patient screening and collections methods in the emergency room to tackle growing bad debt expense, announcing last year that it would require uninsured patients to sign a promissory note agreeing pay their bill or enter a payment plan, according to Lauren Coste, director of corporate finance specializing in for-profit health care facilities.  Non-paying customers who did not start paying their bill would immediately be moved to collections (“Peers, Collectors, Monitor HMA’s New Collections Strategy,” Nov. 7, 2007). The Naples, Fla.-based company implemented the policy after interviews with patients revealed the hospital chain was more than its fair share of charity patients because it had a reputation of being lenient.

Coste said HMA’s new screening and collections policies have been successful in bringing down its bad debt and uncompensated care expense. (“HMA Second Quarter Admissions Decline: Bad Debt Expense Improves,” Aug. 5). However, HMA indicated during its conference call to discuss second quarter financial results that its reputation has changed since the new policy took effect and some low-credit insured patients are not coming in for treatment at all.

While its for-profit peers enjoyed positive admissions growth at their hospitals open at least a year, HMA’s admission’s growth declined 3.8 percent during the second quarter 2008, according to Fitch’s quarterly analysis of the for-profit hospital industry.

HMA has said those patients who have gone elsewhere because of its new collections policy appear to be those least likely to have paid their balance after care. Nonetheless, Coste said HMA has to find a way to balance giving appropriate care in an appropriate setting with getting paid for it.

“They have to figure out how to enjoy the success of keeping bad debt and uncompensated care down without losing the (patient) volume,” Coste said. “Insured business is good business.”