Tenet Centralizes Program, Cuts Unpaid Bills

 
“Centralization” appears to be the buzz word for large for-profit hospitals as they look for ways to boost patient debt collections. In this story, insideARM.com continues its look at the strategies some companies are using with a review of Tenet Healthcare Corp.’s three-year old centralization initiative.

“There are many different pieces that contribute to the company’s bad debt reduction strategies,” said Steven Campanini, a spokesperson for Dallas-based Tenet, an owner and operator of 56 hospitals in 12 states.

At the heart of Tenet’s strategy are three regional centers that focus on collecting payments from its three main sources of revenue. One center focuses on insurance providers, another on government claims, such as Medicare, and the third focuses on self-pay and uninsured patient collections.

Each center operates at least two independent sites located in different parts of the country. Tenet set up multiple sites to avoid downtime that can result from staff illness, vacation, or a natural disaster, such as a hurricane, that could limit or shut down a site.

The centralization initiative has had a big impact on Tenet’s collection efforts, the company’s senior vice president of patient financial services told investors in June. Since the initiative began, the number of days that overall receivables were unpaid decreased 15 percent by the first quarter of 2007, said Stephen Mooney. The number of days managed care receivables went unpaid dropped 38 percent. And the number of days Medicare payments went unpaid declined 61 percent.

The effort also appears to be helping Tenet lead the industry in curtailing bad debt expense. The company’s debt expense as a percentage of sales was 6.8 percent in the second quarter of 2007, minus discounts to the uninsured, according to an August report by Fitch Ratings Co. The industry average, which includes discounts to the uninsured, was 10.7 percent. 

Tenet is now shifting its focus to why accounts aren’t being paid, developing a model to categorize patients according to those insured, uninsured, with unpaid co-pays or deductibles and by credit scores.

The hospital chain is pre-registering patients and getting insurance approval before service, including keeping a record of all contacts with insurance providers before non-emergency medical care is provided. Financial counseling also is being offered to patients to create payment expectations before service.

To help mitigate bad debt, Campanini said Tenet also offers discounted rates to uninsured patents, informs self pay patient about indigent care funds that they may qualify for and taps into local government funds that reimburse hospitals for some of the charity care they provide.

Campanini said Tenet is also working on collecting deposits for self pay patients and setting up payment plans. In addition, Tenet experimented with United HealthCare to distribute credit cards at a low interest rate for self-pay employees of United and Tenet.