Bruce Nelson 

What happens when patients who aren't residents of a county improperly use that county's public hospital resources? That situation faced Parkland Memorial Hospital last summer.

At a Glance

In redesigning its front-end workflow to include demographic verification and evaluation of patient financial need, Parkland Memorial Hospital, Dallas, learned the following lessons:

  • Automation is necessary.
  • Integrated technology provides significant benefits.
  • The automated system should evaluate patient financial need.
  • Front-end technology should ensure nondiscriminatory compliance with hospital policy.
  • Community public relations should be maintained.

Hospitals today face a challenge in confirming whether all the demographic and financial information submitted by patients is accurate. Some patients may be intentionally misleading healthcare providers in order to receive free care.

In July 2006, Parkland Memorial Hospital in Dallas publicly announced that it was conducting an investigation to identify the number of patients who appeared to be taking advantage of taxpayer-supported free care. The announcement created heavy media attention, with newspaper reports and editorials, TV reports, and radio call-in shows all commenting on the situation. The viewpoint of the media was that it was unfair of some patients to take advantage of the free care system. Subsequently, Dallas County began pursuing approximately 120 patients who had given incorrect information and who owed more than $4 million.

One case involved a woman who presented herself as a Dallas County resident, but who in fact owned a large home in another county and a business in another state. Her treatment for breast cancer totaled more than $100,000. (When questioned, she agreed to work out a payment plan.)

"We are a tax-supported institution, and we have a fiduciary responsibility to the taxpayers of Dallas County," says Jim Perry, vice president, revenue cycle, at Parkland. "Based on automated demographic and financial information, investigators literally found millionaires coming in for free care at Parkland."

The hospital reported the patients to the Parkland Hospital Police Department. "We are trying to protect the reputation and integrity of our charity program," says Perry. According to Texas state law, if a public hospital in Dallas County treats a patient from another county, the county in which the patient lives must pay the hospital-but only for those who live at 200 percent of the federal poverty level or below.

Parkland Memorial Hospital has emphasized in its statements that it is committed to providing high-quality health care for all Dallas County residents, and wants to treat all patients fairly.

How Parkland's Workflow Changed

Parkland needed to change both business practices and workflow for demographic validation and patient financial analysis. The hospital's registrars required a way of checking whether the information provided by patients was current and correct. Anecdotally, they knew some patients were not being truthful; also, the amount of returned mail generated from invoices indicated the hospital needed a more sophisticated way of identifying and confirming demographics. Admissions and billing staff recognized that their
processes were paper-intensive and that they were unable to focus their resources properly.

While looking for a way to find and verify data efficiently, the hospital also was implementing a new health information system. Among other things, the new system included software that could integrate demographic validation, prediction of payment, and automatic charity processing directly into the registration system. Before the hospital went live with the software, its administrators thought the benefits of double data entry would be worth the time and trouble it would require. As a result, Parkland used a web-based version of the automated software for about six months, until the integrated software went live.

Developing the new workflow raised a number of important considerations, including the possible use of automated approval or denial based on automation results, whether charity applications should be completed by the patient or by Parkland staff online in real-time, how priorities should be set for patient follow-up, what documentation requirements are necessary when patient-supplied information conflicts with automated data, and what kind of prompt-pay discount policy should be established. After these issues were all considered, workflow was revised based on Parkland's policies and procedures.

It is important to understand that Parkland implemented the new software not to "go after" patients who might be lying about their financial circumstances, but to improve accuracy and better assist patients. Parkland views changing the way it processes patient information primarily as a means to ensure that patient statements are sent to the correct addresses.

Parkland also is interested in using resources more efficiently, including using prediction of payment, or risk segmentation, to determine which collection efforts are most productive. Parkland managers now routinely assess payer mix and self-pay demographics, use portfolio modeling, and identify bad debt and charity cases on the front end. These new processes allow them to collect the most money possible while expending the least amount of collection resources. Automation has provided ways to create a more intuitive workflow for end users, reduce the need for manual audit, and identify or correct human error. 

Common Workflow Obstacles

Implementation of the integrated software required a front-end workflow redesign and staff training. For example, automated demographic validation gives registrars real-time address updates. However, if a registrar sees system information that conflicts with information the patient is reporting at the time, the registrar must know how to discuss the discrepancy tactfully with the patient.

Likewise, time-of-service collection workflow can be affected when the healthcare facility knows how likely it is that the patient is going to pay his or her bill. Given that the best opportunity to collect is at time of service, should the hospital focus collection efforts on those patients most or least likely to pay? Workflow should be refined to match patient payment probability characteristics. Empirical data show that adjusting workflow based on payment probability increases time-of-service collection as well as collection follow-up results.

Automating discounts and write-offs for the uninsured requires workflow redesign and staff buy-in, a challenge for many hospitals not used to expending resources on accounts for which they do not get paid. Additionally, when patients apply for charity care but the financial information they supply conflicts with automated data, staff members must ask them for financial information that will prove their circumstances. Typically, however, the process results in decreased bad-debt write-offs and increased charity write-offs, more accurately reflecting the level of charity care the hospital actually provides.

5 Lessons Learned from Parkland's Experience

Automation is necessary. Healthcare organizations need an automated system that screens for basic demographic and financial information. Without automation, Parkland was unable to verify information supplied by patients.

Integrated technology provides significant benefits. The technology should be integrated into a health information system; a fully integrated environment ensures compliance with the hospital's credit and collection policies. It also enables hospitals to verify accurate and complete information via a direct interface.

The automated system should evaluate patient financial need. Hospitals should evaluate patients' financial need early on to enable the hospital-and the patient-to make smarter decisions.

Front-end technology should ensure nondiscriminatory compliance with hospital policy. With the increase in IRS audits, outside scrutiny, and state and
federal lawsuits regarding billing and collection practices, it is essential to have a workflow in place. The plan should include nondiscriminatory reconciliation reports that can easily explain collection actions taken in regard to patient accounts.

Community public relations should be maintained. Surveys consistently show that the public is skeptical of hospital billing practices, according to HFMA's PATIENT FRIENDLY BILLING® project. In this environment, hospitals should "walk the extra mile" to help patients. Hospitals have a right to expect payment from patients who can afford to pay, but they also should identify, as early as possible, those who can't-and those patients should be offered a financial assistance program in accordance with policy. It makes no financial or public relations sense to try to collect from someone who cannot pay. 

Parkland's Story Is Continuing

Last summer's news stories "brought us a great deal of media attention, and, fortunately, we've seen tremendous support for our new business protocols," says Jim Perry. "We haven't had negative reaction to the publicity-none at all. The taxpayers are glad we are using more businesslike practices. And our community PR has improved as our business practices have improved.

"We have only scratched the surface, and we will continue to drill down to other areas where we can get a solid ROI," says Perry.

While two county prosecutors have been assigned exclusively to similar cases that Parkland may uncover, the hospital will continue to provide high-quality health care with solid business practices.

Bruce Nelson is vice president, SearchAmerica, Inc., Maple Grove, Minn. (


Glossary of Terms Related to Automated Registration 

  • Automated charity processing: Predicts bad debt and charity cases during patient registration
  • Demographic validation: Provides the ability to update and verify addresses, Social Security numbers, and other patient information
  • Portfolio modeling: Predicts payment behavior based on empirical data of provider's patient population
  • Prediction of payment: Determines who is likely to pay a healthcare bill based on various financial attributes
  • Risk segmentation: Maximizes collection efficiency based on those who will pay, those who won't, and those who require financial assistance

About Parkland Health and Hospital System

Parkland Memorial Hospital was founded in 1894 as the primary teaching hospital for the University of Texas Southwestern Medical Center. The 968-bed facility is now part of a health system that features 10 centers of excellence, and has the distinction of being the busiest maternity hospital in the United States-and second busiest in the world.

Employing more than 8,000 and generating $2.4 billion in business activity each year, the hospital system is a major economic driver for Dallas County.

Its patient demographics include 47 percent Hispanic and 31 percent African American, and the greatest percentage of its payer mix (30 percent) is Medicaid, followed by charity care (26 percent). As part of its mandate to furnish medical aid and hospital care to indigent and needy persons residing in the hospital district, the hospital provided $409 million in uncompensated care in FY06.

Publication Date: Thursday, March 01, 2007

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