Sick? Ante up; Our view; St. Louis health firm can help close hospital boiler rooms

A six-volume report released this week by Minnesota Attorney General Lori Swanson suggests that patients at a large non-profit Minnesota hospital system have been badgered, harassed, deceived and intimidated about paying medical bills both before and after receiving needed care, sometimes even at bedside.

The report includes accounts that doctors and other medical staff believe the abusive tactics have pushed some patients to forgo treatment.

Ms. Swanson's office has filed a complaint in federal court alleging violations of medical privacy laws and regulations and violations of state statutes covering consumer protection, privacy and debt collection. But the hospital system, Fairview Health Services, is not the defendant. Rather, the complaint targets Accretive Health Inc., a Chicago-based management services company that has contracts with hospital systems all over the country. This is not just a Minnesota problem; it's a national problem.

Accretive's biggest client is St. Louis-based Ascension Health, the nation's largest Catholic and non-profit health system.

Here's the issue: In an effort to increase revenue and reduce costs, Fairview lets Accretive run several of its hospital departments. Under the terms of their contract, the more Accretive improves Fairview's bottom line, the more money Accretive makes.

Accretive's control, however, is not limited to installing its employees to supervise hospital employees in the billing and collection departments. The company also establishes systems and procedures and enforces them through hiring and firing authority. Accretive sets rules that must be used by hospital staff in health information management, appointment scheduling, pre-registration clearances and check-in desks for scheduled procedures and emergency situations.

Thus, decisions that could have medical consequences are transferred from a medical care facility to a company whose main incentive is financial. Patients and their families are unaware that they are not dealing with the hospital in which they have placed their trust.

With health care representing more than 17 percent of all economic activity in America, medical costs have become an urgent national concern. But dedicated health professionals know that the greatest cost savings result from improving the quality of care patients receive-from eliminating or reducing medical errors, identifying the most effective treatment protocols and making sure patients get them and avoiding unnecessary tests and procedures that don't help (and may hurt) patients.

Not present on this list of ways to cut costs is threatening to deny patients care, even emergency care, if they don't first pay outstanding bills or pay for care in advance. Neither is representing oneself as a "financial counselor" and appearing at a sick patient's bedside to extract debt-repayment commitments. Ms. Swanson's report describes such incidents and worse.

Indeed, the report describes company supervisors immersing hospital staff in an intense, high-pressure debt-collection culture reminiscent of low-rent boiler-room operations. The report also cautions that such practices are inconsistent with the mission of non-profit hospital systems and could put their charitable-institution tax-exemptions at risk.

St. Louis-based Ascension operates 1,400 health care facilities in 21 states and the District of Columbia. Its operations have been highly regarded for their faith-based dedication to caring for uninsured and low-income residents of its communities.

Asked Thursday about Accretive's alleged practices in Minnesota, Ascension sent us a statement reaffirming that Ascension's policies "reflect our commitment to recognize the human dignity of our patients and treat them with respect and compassion." The contractual services Accretive provides to Ascension facilities, the statement said, must be "in compliance with Ascension Health policies."

But Ascension, which held 7.1 percent of Accretive's common stock as of Dec. 31, could do more. It could pressure Accretive to clean up its act with other clients.

Through a master services agreement that originated in 2004, Accretive's contracts with various Ascension-affiliated hospitals generated more than 40 percent of Accretive's total net services revenue in 2011. The agreement expires at the end of this year.

That's serious leverage.