By Lola Butcher

Collecting money owed by patients is a delicate balancing act. Two healthcare systems are using different collection approaches, but they share a common value: protecting their reputations as patient-focused healthcare providers.

Mission-oriented revenue cycle leaders recognize that the amount of money collected needs to be balanced with the use of patient-friendly practices. Patients do not typically distinguish between a hospital that provided excellent care and the collection representatives who contacted them after the care was delivered.

"Never forget that those folks represent your hospital. If they do a poor job, it tarnishes the reputation of your organization," says Greg Meyers, vice president-revenue integrity at INTEGRIS, a 14-hospital system in Oklahoma.

To ensure a patient-oriented approach, INTEGRIS moved its collections in house. Cleveland Clinic has taken the opposite approach and is trying to form close partnerships with collection agencies that share its mission.

Strategy 1: Partnering with Collection Agencies

Cleveland Clinic contracts with 10 billing agencies, five of which handle accounts receivable. The others deal with bad debt accounts or estate collections. Many healthcare financial executives would refer to these collection agencies as "vendors," but Lyman Sornberger, executive director of revenue cycle management, prefers the term "partner."

"Our philosophy is that we want a partnership, not necessarily a vendor/provider relationship," he says. "That partnership means they know our business, they know our mission and philosophy, and they will adhere to it."

As a result, the health system will not choose outside agencies based only on the lowest bid. "Cheaper isn't always best because that cheaper vendor, no matter how you hold them accountable, will probably only do the minimum, which leaves you at some risk," he says. "We want more of a personal touch, and we're willing to pay for that."

Cleveland Clinic creates partner relationships with outside companies through three key steps:  evaluating bids, negotiating contracts, and monitoring performance, Sornberger says. The Clinic's policies, standards, and "Patients First" principles are continuously communicated to its partners, and these agencies are expected to mirror the Clinic's approach in their interactions with patients.

Bidding and contracting. The creation of a Cleveland Clinic partnership starts during the request-for-proposal process. The Clinic scrutinizes bids to find organizations that share its values. "We want to make sure they are doing due diligence in, for example, the selection of employees. If they don't agree with our philosophy of due diligence, then we're probably not a good partner," Sornberger says.

Similarly, Sornberger puts a high priority on giving employees training on the Fair Debt Collection Practices Act, HIPAA privacy regulations related to collections, applicable state laws, and other compliance issues?and expects outside agencies to do the same. Cleveland Clinic believes that new collections personnel need formal classroom training program that includes interactive scenarios and testing.  "So if a vendor says, 'We have a buddy program where trainees sit with an experienced worker,' we don't tell them it's the wrong thing, we just say that is not our culture," Sornberger says.

Details of the partnership relationship are spelled out in the Clinic's contracts, which include the following statement: "Company ABC will adhere to all client policy and procedures and adhere to the Cleveland Clinic Health Systems mission." This means that any time the Clinic changes a billing or collection policy, contracted agencies must adapt their procedures to comply.

Evaluating performance. Sornberger introduced a quality program to ensure all revenue cycle employees and vendors are meeting the Clinic's standards. Dedicated auditors review anywhere from 10 percent to 100 percent of accounts, depending on the area, each month. "They audit accounts, internal and external, to see whether policies are being followed and whether we are living up to our mission," he says. "If I see anything glaring, then I reach out." 

In addition, each of Cleveland Clinic's revenue cycle units and external vendors is required to hit the 95th percentile of certain benchmarks and thresholds. Cleveland Clinic distributes a monthly report card to each of the five agencies that handle accounts receivable. Each agency's report shows how its performance compared to the (blinded) results of the other four agencies (see the exhibit below). Any agency that is the lowest performer for three consecutive months receives a termination letter. In the past six years, only two agencies have been terminated. 

 /uploadedImages/Publications/E-Bulletins/Patient_Friendly_Billing/Archives/2012/September/Exhibit 1 Cleveland Clinic Collection Agency Performance.jpg 

The report card reflects not only the agency's collection results but other factors, including the number of complaints received from patients and the number of VIP complaints that have escalated to the C-suite. "We measure agency performance beyond just the financial exposure to the health system," Sornberger says.

Strategy 2: Replacing Outside Agencies with Technology

Two years ago, INTEGRIS, a 14-hospital system in Oklahoma, moved its accounts receivable collections in-house to accomplish two goals: Increase the amount of money collected and improve the patient experience.

The health system hired six additional staff members and invested about $400,000 in technology to drive a largely automated collection process. "By the fifth month, we had paid for the system and increased our collections by more than $350,000 a month-with a much more patient-centric approach," says Greg Meyers, vice president-revenue integrity at INTEGRIS. "The complaint calls from patients who are being sought out by collections dropped significantly. It turned out to be a good decision."

INTEGRIS' decision hinged on two factors. First, the emergence of new technology convinced Meyers that collections could be handled efficiently in-house. Furthermore, the system's unannounced audits of collection agencies revealed that the agencies were not always representing INTEGRIS with a patient-friendly approach.

"Collections activities can be the last voice of INTEGRIS," he says. "When patients leave the hospital, and they have gotten wonderful care and life-saving care, all that goodwill can disappear if they have bad collection experiences. We felt it was so important to keep the patient-centered focus that we moved all that back into our business office."

Segmenting patients. INTEGRIS uses a software program that assigns a propensity-to-pay score to each patient at the time of registration (see the exhibit below). Those scores, which reflect a patient's payment history and payment ability, are combined with account balances to segment patients into categories, each of which has a pre-determined protocol for collection activities. For example, patients whose scores indicate they are very likely to pay quickly get what Meyers refers to as a "concierge call."

"For folks who have high scores, it's really not a collection activity," Meyer says. "It's more like, 'How was your visit, was there anything we could do better, anything you didn't like, and by the way, since we have you on the phone, we can go ahead and take care of your account now, if you'd like.'"

 /uploadedImages/Publications/E-Bulletins/Patient_Friendly_Billing/Archives/2012/September/Exhibit 2 Integris Pre-Bad Debt graphic.jpg 

Different automated workflows are programmed into the collection software to drive the various protocols. "Letters with different verbiage on them go out at different points in time, based on where someone falls on the propensity-to-pay chart," Meyers says.

"Now that we have a lot of history, we can see pockets of opportunity where people with certain scores usually always pay," he says. "We didn't know that in the past, so those accounts would get sent on to collection agencies. Now, we collect those internally, eliminate fees, and provide a better experience to the patients."

Automating charity designation. INTEGRIS further automated its processes by creating a presumptive charity program for patients with very low propensity-to-pay scores that translated to a low ability to pay. Historically, staff devoted hours to the tedious process of getting patients qualified for charity care. After it implemented the propensity-to-pay technology, INTEGRIS analyzed data for patients with very low scores below a defined threshold and found that more than 99 percent of them eventually qualified for charity care. 

Meyers' staff used that analysis to convince INTEGRIS' outside audit firm that automatically assigning accounts with certain scores to charity care was appropriate. "That cut down on a whole internal administrative hassle that we used to have," he says.

Collecting bad debts.  About 4 percent of INTEGRIS' gross revenue winds up in bad-debt collections, which Meyers considers an acceptable level for the Oklahoma market. "Our self-pay population has increased, but our bad debt has held fairly stable over the last several years," he says. "That indicates to us that moving collections back internally has been a good decision."

INTEGRIS contracts with two external agencies for bad-debt collections and one secondary-placement agency that pursue accounts when the primary agencies are unsuccessful. To be selected as a vendor, the agencies must: 

  • Provide staff members who are dedicated solely to the INTEGRIS account.
  • Conduct compliance training so employees know the federal and state laws that govern collection practices in Oklahoma.
  • Record all inbound and outbound calls made on behalf of INTEGRIS.
  • Maintain a disaster-recovery program so that records are always backed up.

INTEGRIS monitors the agencies through unannounced visits to audit their collection practices and ensure that the agencies are representing INTEGRIS in a professional manner.

Eliminating worry

Because the technology needed to segment the patient population for specific collection protocols is so expensive, Meyers says small stand-alone hospitals may not be able to justify it. But he recommends technology-driven, in-house collections to those health systems that can afford it. Since it started bringing A/R collections in-house two years ago, INTEGRIS has fine-tuned the system to reach the right balance of patient-friendly methods and collection success-and eliminated the worry that an overzealous outside agency might be heavy-handed in pursuing money from an INTEGRIS patient.

"We're at the point now where we have a multi-tiered focused approach and have a lot of different collection strategies based on the financial profile of the patient," Meyers says.


Lola Butcher is a freelance writer and editor based in Missouri.

Interviewed for this article:
Greg Meyers is system vice president revenue integrity, INTEGRIS Health, Oklahoma City, Okla., and a member of HFMA's Oklahoma Chapter (

Lyman Sornberger is executive director of revenue cycle management, Cleveland Clinic Health System, Cleveland, Ohio, and a member of HFMA's Northeast Ohio Chapter (


Publication Date: Monday, September 17, 2012