Can Focus on Coding and the Revenue Cycle Turn Around Failing Hospitals?

California-based Prime Healthcare Services Inc. has made a name for itself for buying failing hospitals and turning them around.

The chain, which operates facilities in California, Texas, and Nevada, recently made the jump to the Northeast, purchasing two hospitals in the Philadelphia area. The Philadelphia Inquirer profiled  the company and its “secret sauce” to making hospitals profitable: “ensure that it pays no more than necessary for anything needed to operate, improve documentation of patient care to boost revenue and quality of care, and beef up billing and collections.”

By focusing on coding, billing, and collections, and by trimming expenses, the company has acquired 20 hospitals, although because it is a privately held company, results outside of gross revenues ($1.6 billion) are not made public.

The Inquirer quotes one healthcare expert, Alan Zuckerman of Health Strategies & Solutions Inc. in Philadelphia, who is skeptical of Prime’s business model. “They are buying hospitals that are in great distress, with no apparent economies other than what you could get from a corporate back office,” Zuckerman told the Inquirer. “It’s in opposition to what everyone else is doing.”

But according to Andrea A. Pedano, medical director for case management, utilization, coding, and documentation at one of the acquired hospitals, Roxborough Memorial, staff had never been trained in proper coding, and when claims were denied, “we had no legs to stand on,” she said. Prime makes coding training a priority.