Mining patient estates to collect on hospital bills

At any Healthcare Financial Management Association (HFMA) event, there is an abundance of collection agencies. At this year's ANI in Orlando, Fla., I found only one such firm that differentiated itself from the rows of suits and khakis handing out tootsie rolls and flashlights to capture eyeballs.

Collecting patient debt ranks close to cleaning bedpans as among the least glamorous and most thankless tasks in the healthcare industry. There are the indignant patients and their family members overwhelmed by the often gigantic debts, and the bankruptcies often declared to avoid them (medical bills are still the biggest driver behind personal filings).

Oftentimes, hospitals will sell the debt after a year or so for pennies on the dollar. The collection rate on those sold debts: about 1 percent, according to some of the vendors I spoke with.

Therefore, a 40 percent collection rate would represent a miraculous turnaround. That is the claim made by a Minneapolis-based firm called Forte.

How does Forte accomplish such impressive results? By focusing on deceased patients and their estates. The company uses a proprietary software system called Probate Finder on Demand to track down open probate cases. The company's system keeps track of more than 3 million probate cases nationwide in about 3,450 different courts. A hospital finance manager can upload the accounts of deceased patients, get a match to estates in probate, and submit a claim against a patient's estate--all without leaving their desk.

"Find what you've been missing," Forte exclaimed in a marketing video.

The cost is dirt cheap: $40 to search for an estate, plus 2 percent of the recovered claim, capped to $100.

I mentioned the practice of estate mining in my coverage of the American College of Healthcare Executives conference earlier this year, but it was something discussed with some reticence. Most hospital managers still see themselves as serving their communities. Going after the estate of someone whose families may be counting on an inheritance - particularly if your organizaton is already providing millions in charity care each year -- isn't exactly an endearing feat.

"It may be easier to write off those accounts. But is that the right thing to do?" that interactive video asked.

Forte's staff further spins PR concerns with a Midwestern sweetness. Sales manager Ryan Jones called the process "survivor sensitive." General counsel Angela Horn said it was a "win-win," and that the families of the deceased "choose this process," primarily because a surviving family member usually asks a probate court to be appointed executor of the estate.

I wouldn't be the least bit surprised to see Probate Finder on Demand on a bunch of hospital finance department desktops very soon. Money is money.

I close this week with a kudos to the HFMA for its quick response to what could have been an embarrassing gaffe: Barring media from keynote speaker Peter Orszag's presentation.

A couple of speakers had been made off-limits to the press, but Orszag, the former head of the Office of Management and Budget, was not among them. I was told to leave after settling in, but I politely declined to do so. Fearing the usher would return with reinforcements and I'd be dragged out, a quick email to HFMA press person Jay Keltner suggesting this wouldn't make primo optics resolved the issue immediately. HFMA also opened up some other previously closed speeches to the press.

An HFMA staffer who approached me just before Orszag began speaking said media had been barred as part of his speaker's contract, but there had been a "disconnect" in communicating this to reporters. I was asked to take my press ribbon off, but otherwise left alone.

I waited by a side door to ask Orszag what this was about--and follow up with some other questions (which you can read about in the top news section).

"It's a fairly standard arrangement," said Orszag, who's now a vice chairman at CitiGroup. However, the way his lip curled suggested he didn't think it was standard to have to answer questions about it.

A post-speech discussion with my media colleagues revealed I wasn't the only one initially turned away. "Orszag's a public figure, man," said one of them, who turned his badge around to get in.

Orszag's parlayed the big government job into a big Wall Street job. It's a great career path, but unreasonable to expect it be paved with opacity. - Ron