Hospital outsourcing ED financial counseling to reduce bad debt

In-house liaison facilitates vendor-staff relationships

When the University of Pennsylvania Medical Center-Presbyterian in Philadelphia turned its attention to addressing the facility’s bad debt, it quickly became clear that self-pay accounts coming out of the emergency department (ED) were the root of the problem. Getting those accounts paid was a losing proposition, notes Raina Harrell, business administrator for patient access, because "there was no way to collect. We would bill the patients numerous times, but they were self-pay patients with no resources, so eventually [the unpaid accounts] would go to bad debt."

The question, she says, became, "What can we do to reduce this or manage it better?" That led to another question: "What can we do to get some of those self-pay patients qualified for medical assistance?"

To find the answer, adds Anthony M. Bruno, MPA, MEd, director of patient access and business operations, the hospital turned to a Collingswood, NJ-based vendor called PATHS LLC, which the facility already was using to manage inpatient medical assistance applications and billing for those patients. Two years ago, he noted, Tony DiLuca, a principal in PATHS, had also led an effort to bill the hospital’s behavioral health accounts that "increased revenue substantially."

The decision was made, Harrell says, to "use PATHS to put a person in our ED — a financial counselor — to educate patients on the medical assistance process after they are seen by a clinician." While some hospitals do the same thing with their own staff, she explains, Presbyterian chose to go with a vendor for two primary reasons:

1. When an in-house financial counselor is in the ED, that person often gets pulled into performing other functions, such as registration, and ends up doing more of that work than actual financial counseling.

2. An outside company can provide data and feedback specific to what it is doing with the financial counseling program and can also talk about other options for health care.

A PATHS financial counselor was put on the most high-volume shift — 11 a.m. to 7 p.m. — Monday through Friday, Harrell says. "We started off with that so we could analyze the results. We set a target goal of [having the financial counselor] see 33% of the self-pay patients in the ED."

To avoid leaving out the ED self-pay patients who came for care during other shifts, PATHS established a reporting process that allows follow-up with those patients by mail, she notes. "So, in essence, we are managing all of our self-pay patients."

At that point, Harrell says, "we decided the process was good, but that it relied heavily on the relationship PATHS had with the ED staff and clinicians." With that in mind, she adds, the hospital put its own ED coordinator in place to oversee the process and make sure that PATHS received the information needed to do the job.

"The only way PATHS gets its information is by registrars giving [the financial counselor] a face sheet for each self-pay patient," Harrell says. "If that process falls apart, they don’t get their 33% [of self-pay patients]."

If, for example, PATHS finds that it is getting face sheets for patients who already have insurance coverage, she says, that lapse is reported to the ED coordinator, who then works with the ED manager to make sure registrars are checking for insurance. "The [reason the program] is successful," Harrell says, "is [because] we have this liaison who makes sure she oversees the process from the time the patient walks in the door, sees the ED registrar, sees the financial counselor and the bill goes out the door."

The program began in March 2004, and by late October, about 30% of the facility’s self-pay ED patients were being seen by the PATHS representative, she says. About 13% of those patients obtained medical assistance coverage, compared to the goal of 15%.

Considering all ED self-pays, including those who come for treatment during shifts that aren’t covered by PATHS, about 8% had obtained coverage by that point, Harrell adds. "We didn’t want to leave out the patients who come during other shifts," she says, "so we established a reporting process [whereby] PATH gets those patients’ information and can follow up via mail. In essence, we are managing all of our ED self-pay patients."

Of the 324-bed hospital’s total ED population — some 2,600 patients a month — about 18% are self-pay, Harrell notes.

DiLuca points out that there is no way at present to link the 13% (or 8%, depending on how you calculate it) of former self-pay patients, who now have coverage, to the resulting financial benefits as they continue to use the health care system. "If those patients come back a month later, they [will then] be on some kind of medical assistance [or] managed care insurance," he says. "Whether they’re admitted, whether they need physical therapy, radiology, or surgery — they’re covered."

Looking at the cost-benefit picture just from the standpoint of the ED service that is covered, DiLuca estimates, the program was "about break-even" by late October.

From the beginning, the financial counseling effort has been about more than just increasing collections, Harrell points out. "When we started the program, our feeling was that it’s not just about money, but also about customer service and educating our patients." As a result of the initiative, she adds, "we have established a stronger relationship with our medical clinic. [Patients] whose care was not managed before now have a primary care physician who is managing their care."

The program has helped Presbyterian identify its "frequent fliers" — those patients who use the ED as a primary care facility and who, in many cases, suffer from chronic illnesses, Harrell says. "We identify them, and then we work out the relationship with the clinic, which is willing to take wound-care patients and patients with asthma, chronic obstructive pulmonary disease, and congestive heart failure."

These individuals are targeted as "hot patients" for medical assistance appointments, she notes. "We work with the ED physicians to get the appropriate clinical form filled out to say that this person has an ongoing condition and needs health care coverage, and then we tell the patients that they are to go to the clinic."

Normally the clinic staff would not accept self-pay patients, Harrell says, but because the process of getting coverage has begun, they agree to treat them.

Initially, there was a problem getting buy-in from ED physicians, who resisted filling out the unfamiliar state forms, she says. But after the hospital brought in representatives from the state Department of Public Welfare to do an inservice with the physicians and to answer their questions, Harrell adds, there were no further problems.

There are a number of success stories of patients who, without the program, likely would not have escaped their self-pay status, she says. "One person came in and mentioned that she was getting food stamps, and the financial counselor said, So why aren’t you getting medical coverage?’" The patient was talked through the application process, Harrell says, and now has medical coverage.

In another case, a patient previously had medical assistance coverage, but it had been terminated when she turned 18, she notes. "The nurse told the financial counselor the person was going to need surgery in the near future. A physician completed an employability assessment form, a clinical form [attesting to the patient’s condition], and she was able to have surgery."

Otherwise, Harrell says, the patient might not have received the appropriate level of care because of her lack of health insurance, or would have accrued large medical bills trying to obtain the appropriate care. "In the past," she adds, "[obtaining the coverage] wouldn’t have happened because there would have been no one to guide her through the process."

[Editor’s note: Raina Harrell can be reached at (215) 662-9295 or by e-mail at Anthony Bruno can be reached at (215) 662-9297 or by e-mail at]