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Utah's largest hospital chain sticking with embattled debt collector

Published May 3, 2012 8:11 am

Utah • Intermountain says its work with Accretive Health won't mirror Minnesota chain's.
This is an archived article that was published on sltrib.com in 2012, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

It's not unusual to see a nurse or doctor hovering after you've delivered a baby, come out of surgery or landed in the emergency room. But a bill collector?

Hundreds of documents released this month by Minnesota Attorney General Lori Swanson revealed that one of the nation's largest debt collectors, Accretive Health, "infused" itself into a Minnesota hospital chain, coaching employees to ask patients for payment at the bedside, sometimes before they received treatment.

The tactics have discouraged some patients from getting care, alleges Swanson, who is suing the Chicago-based company for violating patient privacy, debt collection and consumer protection laws.

The legal battle and a six-part regulatory report Swanson published have shined a hot light on billing practices embraced by hospitals across the country, including Utah's Intermountain Healthcare.

Like Fairview Health Services in Minnesota, Intermountain signed a five-year contract to have Accretive help manage its entire revenue cycle, from the scheduling, registering and admitting of patients to back-office billing functions.

And like Fairview, Intermountain is a non-profit — a status it risks jeopardizing by fusing with a publicly-traded company intent on turning profits, say consumer advocates.

"Charitable hospitals get a huge subsidy by not paying their taxes, billions of dollars a year. It's a legal status, but also a social contract," said Corey Davis, an attorney at the National Health Law Program in Washington, D.C. "If you're embedding debt collectors in ERs, most people would say that's uncharitable."

Intermountain says its relationship with Accretive is different, both more collaborative and more expansive.

Utah's health giant struck a deal with the company in November, and has no plans to cancel it, but "constantly monitors [its] contractual relationships to ensure all activity is in accordance with our mission and values," said Intermountain Finance Vice President Greg Johnson.

The agreement is rolling out in phases, starting with the installation of Accretive's billing software at McKay Dee Hospital in Ogden and Logan Regional, he said. By year's end, all 22 hospitals and 185 clinics in Utah and Idaho will be linked.

Together, Intermountain and Accretive will create a Center of Excellence in Salt Lake City with the goal of bringing more jobs to Utah and "raising the bar" in hospital billing, said Johnson. The center will sell its services to other providers.

Accretive brings to the table software that predicts for patients the cost of their medical care, he explained. The firm will largely train Intermountain employees to set up payment plans for patients, enroll them in public insurance programs and find other resources to help pay the bills.

Intermountain brings an unflinching focus on patient care, Johnson said. "We talk a lot about our mission and values. It's kind of baked into our DNA. I don't see that changing."

The health care industry, however, is in great flux.

Hospitals are struggling to serve growing ranks of uninsured even as insurers and government safety nets look to contain spending. U.S. hospitals lost $39.3 billion in unpaid bills in 2010, about 5.8 percent of their total expenses, according to the American Hospital Association.

Enter companies like Accretive, portrayed by the Minnesota AG as an "uber-collection agency" with unprecedented levels of access to private patient data and a "numbers driven" focus at odds with the role of hospitals "as sanctuaries for those in the dawn of life, the eve of life and the shadows of life."

Accretive declined repeated requests for an interview, but filed a motion this week to dismiss the Minnesota lawsuit. In a prepared statement, the company denied Swanson's allegations as based on "innuendo and unfounded speculation" and noted that 90 percent of all revenue it collects comes from insurers.

"The suggestion that our focus or practice is to put bedside pressure on patients to pay their medical bills out of pocket is a flagrant distortion of fact," states an April 29 press release. "We examine each and every episode of care to ensure that patients are not improperly charged and that the insurance companies are held accountable for what they owe to providers."

Indeed, hospitals asking for cash up-front is nothing new.

Intermountain does this now, seeking payment when patients register for surgery or enter the hospital emergency department, though only after they've been assessed, said Johnson.

Still, exposure of Accretive's practices drew unflattering media attention, causing the company's stock to tumble and a California congressman to call for a federal investigation.

Fairview severed ties with Accretive last month, a decision "made in the best interests of our patients and our organization," said a spokesman Ryan Davenport.

Prior to that, Accretive had full authority over its billing. The company was empowered to fire and reassign Fairview employees, who were required to use a computer system nicknamed "Blue Balls," which tracks whether patients pay their bills, according to Swanson's report.

Emergency room "financial counselors" were taught to ask for payment at the bedside in ways that led patients to think they would be denied treatment without it, the report claimed.

If the patient didn't have a credit card handy, employees asked for a checkbook or encouraged the patient to borrow from a family member. They were told to remind patients that if the bill goes to collections, it can affect their credit.

"Fairview emergency workers got the message that if they didn't collect money in the ER, they would be fired," the report said.

Registration staff ran reports on incoming patients, flagging those with past due balances, including breast cancer patients and moms in labor and delivery. This prompted some Fairview doctors to complain to the Minnesota AG that patients were being chased away and forgoing treatment.

Swanson accuses Accretive of breaching patient privacy laws after an employee last year lost an un-encrypted laptop containing 23,500 patient records.

The arrangement was profitable. Accretive generated about $826 million in revenue in 2011, 12 percent, or $100 million, of which came from Fairview, Swanson says.

It earned those profits, in part, by downsizing staff and outsourcing work to "centers of excellence" in India and Pakistan, she alleges.

"As a for-profit, private corporation, Accretive may boost its stock value by off-shoring jobs to India. It is troubling, however, for Accretive to do so with the assets of a Minnesota charitable organization."

In a pass through arrangement, Accretive managed payroll for Fairview's billing employees. It shared in the money that was earned by boosting collections or cutting costs.

Johnson said there are currently no plans to outsource any of Intermountain's 1,600 revenue management workers, but says the relationship with Accretive is evolving.

Intermountain is in the driver's seat and must approve any change in policy or practice, he said. The health system's charity care policy will remain intact. Once the hospital decides a bill has become bad debt, it will be passed to other vendors and Accretive will not have a role in that collecting, he said.

Johnson, though, said confidentiality agreements forbid him from explaining how money will flow between Intermountain and Accretive. The Center of Excellence they build will be owned and operated by Accretive, he stressed.

Still, some employees are nervous and worry that Intermountain is drifting from its non-profit roots, said an employee who fears being fired and The Tribune agreed not to identify.

kstewart@sltrib.com

Twitter: @kirstendstewart —

Who is Accretive Health?

Accretive Health was started in 2003 by the New York private equity fund Accretive, LLC, which has a controversial history in Minnesota related to the arbitration and collection of debts. It is based in Chicago.

Its CEO is Mary A. Tolan and its board chairman is J. Michael Cline, founder of the Accretive equity fund. —

Intermountain Healthcare in 2011

22 • hospitals, 185 clinics in Utah and Idaho

135,953 • hospital admissions

463,872 • ER visits

2,563,492 • clinic visits

$3.57 • billion net revenue —

How is it going?

Patients, share your story. How have Intermountain's bill collectors treated you? What is the health system's track record and how is it changing? Email kstewart @sltrib.com.