The following is a profile of just one of the thousands of revenue cycle leaders across the U.S. I'd like to thank Michael Bumann for generously offering his time to provide his insights. If you are a revenue cycle professional at a healthcare organization and would like to participate in a profile like this, please contact me. I would love to hear from you.
What's your name, organization & position?
Michael Bumann, Founder & CEO, Red Dot Management, LLC
How long have you worked there?
I founded Red Dot Management, LLC in 2015 to offer healthcare financing solutions for motor vehicle accident accounts to national hospital systems, Accountable Care Organizations (ACOs), and large practice groups. There was a need in the provider community for better access to financing so they could fully monetize their Third Party Liability/Medical Lien accounts receivable.
At some point, we realized it made sense to build a larger platform so we could scale the operation to acquire larger portfolios of accounts but still offer a high level of service.
How long have you worked in the revenue cycle field?
I’ve been involved in the Third Party Liability (motor vehicle accident/medical lien) industry since 2003. I worked in the legal industry in the Denver area when Colorado switched its automobile liability insurance laws from a PIP to a Tort system. Once that switch was made, there existed a vacuum as medical providers had to adapt to a new marketplace process for securing payment for third party claims. I was one of the first to step into this space and start providing solutions.
Essentially, we take a complex, long-term receivable whose resolution (i.e. collection) is tied to an underlying motor vehicle accident and monetize it by acquiring it from the hospital (or servicing it on their behalf, though we prefer to acquire). While this patient segment only accounts for ~3% of a hospital’s gross billing, it’s ~$10 billion per year in receivables.
These complex receivables require a very specialized work force, well beyond that of an in-house employee and usually that of most vendors, as well as patience. They take 24-36 months, on average, to resolve. In addition, something we offer that makes us unique is we never seek recovery directly from the patient. Our recovery is entirely on the underlying claim. We bolster that unique recovery approach by being able to acquire a hospital’s entire portfolio of related accounts. We don’t cherry pick; we buy everything, the good, the bad, the ugly!
Simply put, we create immediate and constant liquidity for a complex, and difficult-to-resolve receivable that is a small part of overall billing, but can equate to substantial revenue. We do this without exposing patients to negative collection efforts.
How did you land in the world of revenue cycle?
It was a case of “right place, right time” being on the frontline of an industry born in Colorado. It was exciting to be in at the beginning as an entire market was created. It’s an industry with many moving pieces, and to help create the original roadmap was exciting.
I was working in the personal injury legal industry, first on behalf of insurance defense law firms, then for law firms that represented injured plaintiffs. It was quickly evident that the medical providers and facilities needed guidance in navigating this new market. To answer that need, I formed my first company in 2003 to create several multi-disciplinary clinics that focused solely on providing medical lien-based treatment to patients injured in motor vehicle accidents. Today, Red Dot Management provides a financial platform for national hospital systems, Accountable Care Organizations (ACOs), and large practice groups with the financial capacity to onboard acquisitions in the range of $1 million to $100 million of gross filed charges.
If you could thank just one person in the industry, who would it be?
There are two ways to answer this question: First, I really couldn’t limit my “thank you” to just one person. When I think back on my career and all the twists and turns navigated in a new and growing industry, the number of people who helped me along the way is huge.
My second thank you is reserved for all those who told me I couldn’t make a business in this environment work; that the asset class was too complicated, required too much coordination; that everything had to be built from scratch (data analytics had to be built, web-based document management systems, even our CRM had to be custom built). To these people I owe my biggest thanks because nothing motivates me more than being told I can’t do something.
What does your typical day at work look like?
I tend to rise early and enjoy a good cup of coffee or three. I’ll spend a little time reading something I’m interested in, take our dog for a short hike, and depending on where I am in the world, I’ll start in on responding to emails and returning phone calls.
Once the first round of emails are out of the way, I move on to whatever is the most pressing item on my agenda (I like to eat any “frogs” early in the day). My duties are usually broken down into two broad categories: Red Dot Management related business and my Firefighting/EMS charity work and collaboration efforts with groups and agencies here and in Central America. I find this creates a nice work/passion balance.
The middle of the day, unless I’m in a deal of some kind, is time set aside for one or more of my children (we have 4 ranging in ages from 5 to 11). We spend an hour or two involved in some outside activity (jet skiing Lake Tahoe is a Summer favorite, grabbing a few runs on the slopes in Winter, skateboarding and bike riding in the Summer; tacking on a trip to our favorite ice cream shop remains a year-round request).
After we return from whatever excursion we had that day, I tackle whatever is next. I build in a lot of flexibility in my schedule for things that come up; I’m not one to tightly schedule every minute.
Evenings are set aside for the family. Dinner together is important to us. Once the kids are set for bed, I’m tying up loose ends from the day. I tend to send more emails in the evenings. This is also the time when I do most of my forward thinking research. Whether it’s identifying a better way to encrypt PHI via document file transfers, or implementing the updated cervical spine assessment protocol for a training in Mexico, evenings are when I’m most creative.
Can you think of something great you've learned about this business you'd really like to pass along?
This is an example of an industry that can flourish by creating win-win scenarios. By providing liquidity for a complicated, and uncertain asset class, the benefits are many. For those who provide medical care and treatment to a vulnerable patient segment, we provide certainty in the form of liquidity. The potential burden on society in the form of additional cost absorption in government payor programs (Medicaid and Medicare) is avoided; and people injured in an accident can continue to access needed healthcare even if they are without health insurance or have the means to pay for their care. It feels very good being part of a business that earns returns by helping so many people and organizations.
So what’s the lesson I’ve learned from founding companies in this industry? Be in a business that helps people. The rest flows from that principle.
Is there a TV show or movie that you can't live without?
Well, I’m more of a book person over TV shows (though Denis Leary’s 6 seasons of “Rescue Me” was genius), I tend more towards adventure documentaries. The movie “The Secret Life of Walter Mitty” is a favorite, as is the soundtrack.
If you weren't in your current career, what else would you most love to do for work?
Firefighting and EMS. No doubt. I’ve been a Firefighter/EMT since 2004 and have a real passion for this work. Our NGO is a continuation of this passion and a culmination of my experience and relationships helping to bring modern rescue techniques and equipment to developing countries.
What do you think needs to change most urgently in the revenue cycle field?
I can tell you with certainty that in the TPL/Medical Lien space there exists a need for more collaboration and network building. Ours is a fragmented, though growing industry. With most companies being very regionally focused (most companies are small and in only one major metropolitan area), and only able to offer limited account servicing capabilities.
We’ve been working on breaking down these barriers in a variety of ways. One of those ways is with our partner platform created to form partnerships with servicing companies. Our industry research shows there exists a need for servicing companies of all sizes to have a “buy partner” so they can offer account acquisition options to their clients (without losing their revenue stream).
In addition to creating worthwhile cross-sector relationships, continuing to educate hospitals and practice groups that there exists another option beyond servicing these accounts either in-house or through a less specialized vendor (such as a non-specialized billing company) is another area we are addressing.