NY Times Finds Secrets to HCA's Success in Patient Financial Services

Why is Hospital Corporation of America (HCA), one of the nation’s largest healthcare provider chains, so successful? The New York Times waded in and found that by focusing on the emergency room revenue cycle — revising coding procedures and collecting up front for non-emergency emergency room visits — the company increased its overall revenues and margins significantly.

The Times story, which weighs in at more than 4,000 words, traces HCA’s formation, its early struggles and indiscretions, and examines the reasons behind its impressive growth and margins over the last several years. Today HCA is a chain of 163 hospitals and more than 100 surgery centers generating revenues of nearly $35 billion. And much of its success, according to the Times, lies within its patient financial services policies and procedures.

Increased reimbursements

HCA went from cheating the reimbursement system to beating it. In the 1990s it earned notoriety after receiving one of the largest fines for fraud in Medicare history, $1.7 billion. “Among the secrets to HCA’s success: It figured out how to get more revenue from private insurance companies, patients and Medicare by billing much more aggressively for its services than ever before,” writes the Times.

The newspaper conducted an analysis of HCA’s Medicare reimbursements and found that the chain was lagging far behind the national averages of patients who are classified among the two highest reimbursement categories under Medicare. By adopting the evaluation and management guidelines from the American College of Emergency Physicians and employing the corresponding coding procedures among its collective emergency rooms, the company was able to not only bring its Medicare-classified patients up to the national average, it surpassed it, and in the process increased revenue by 7 percent.

“The system uses interventions, like IVs and cardiac monitoring as a proxy for the acuity of the patient and the resources involved in the evaluation and management of the patient,” HCA writes in a statement prepared in advance of the Times article. “We implemented this system, which is used by many hospitals, because it provides for greater consistency and simplicity than the point system HCA had previously used. We know of no better organization than the American College of Emergency Physicians to establish a model that provides a national standard for more consistent classification of emergency visits for reimbursement purposes. After several years of using this model we believe our classifications are generally consistent with national averages.”

According to the Times, HCA found the new coding methodology to be too successful. “Behind the scenes, however, HCA executives said they realized the new system was causing too many of its patients to land in the highest-paying categories,” the Times writes. “HCA’s head of ethics and compliance, Alan R. Yuspeh, said in a telephone interview last year that the company had identified the problem shortly after introducing the system and changed it to bring the company in line with the national average.”

The takeaway for any healthcare provider is that it is worth the time to analyze how your respective facility rates among the national averages for patient classifications and reimbursements, and if you find that you are trailing behind the pack, figure out why and what you need to do to catch up. Insurers, Medicare, and Medicaid are numbers games, and as HCA found, there is plenty of wiggle room in coding methodologies.

Reducing emergency room abuse

The Times also found that HCA hospitals are vigilant in the emergency room about treating only emergencies. “Patients whose ailments were not deemed urgent were told to go somewhere else, like a free clinic, or that they could be treated if they paid the co-payment for their insurance or around $150 in cash,” the Times writes.

HCA, however, maintains that the Times places too much emphasis on its pre-screening procedures. “Many ERs in America have adopted a variety of systems to determine when a patient in fact needs emergency care,” HCA says in a prepared statement. “About half of HCA affiliated hospitals have done so and they typically have two caregivers, usually a triage nurse and a physician, make that determination. In 2011 HCA affiliated hospitals had 6,143,500 ER visits. Of that number, 80,000, or only about one in 100, were determined not to have an emergency condition, were offered information on more appropriate care settings and chose to seek alternative options.”

To read the entire New York Times article, click here.

To read HCA’s response, written in advance of the article, click here.