CHI buys in to collections

System takes minority stake in Tenet’s billing unit

The allegations facing billing and collection company Accretive Health were among the factors influencing Catholic Health Initiatives’ decision to acquire a minority stake in Tenet Healthcare Corp.’s Conifer Health Solutions, executives said.

Under the 10-year deal, which was announced last week, Conifer will assume responsibilities for revenue-cycle services at 56 CHI hospitals. Conifer President Steven Mooney said some CHI officials, in the aftermath of the Accretive situation, asked a consultant to take a closer look at Conifer’s operations. Mooney said Conifer upon review “came through with flying colors.”

“We were built differently, we were born from inside a healthcare provider and we understand how important the patient is,” Mooney said, comparing Conifer with Accretive. “The patient is the most important asset.”

The parties began talks about two years ago, with negotiations heating up in the past nine months. Conifer and CHI remained silent on the financial details of the deal, including the size of CHI’S stake in the Frisco, Texas-based subsidiary of for-profit Tenet. The addition of CHI hospitals means Conifer will provide revenue-cycle services to about 150 hospitals. Tenet created Conifer in 2008, and the deal with Englewood, Colo.-based CHI boosts their annual patient revenue by about 55%, going from $11 billion to $18 billion.

Outsourcing revenue-cycle services is new for resource-laden systems the size of CHI, said Sheryl Skolnick, an analyst with CRT Capital Group. CHI previously handled revenue cycle internally. The deal could represent a change in this philosophy as other larger systems might follow CHI and outsource revenue-cycle operations. “I think they’re right that there are many things that hospitals do well,” Skolnick said. “Collecting revenue is not one of the things they particularly do well.”

Mooney’s hope is the deal will drum up business, and he said Conifer had similar deals in the works. But unlike the CHI transaction, none of them involves offering a stake in Conifer. Having CHI onboard could also unlock the faithbased, not-for-profit market for Conifer.

Prior to the deal, Conifer provided revenue- cycle services to 100 hospitals, including the 51 hospitals operated by Tenet. Faith-based, notfor-profit facilities made up the majority of the remaining hospitals, Conifer officials said. That includes the eight hospitals of the Sisters of Charity of Leavenworth Health System based in Lenexa, Kan.

When assessing the company’s internal handling of revenue cycle, CHI officials felt other matters, including healthcare reform, deserved closer attention. Besides freeing up resources—some employees involved in revenue cycle handle multiple responsibilities—it was also a matter of improving quality. CHI decided it needed Conifer to reach best-in-class status, said Dean Swindle, CHI’S executive vice president of business services and chief financial officer, noting Conifer’s success with patient satisfaction and their overall business model. While CHI is doling out responsibility to Conifer, it will retain control of the revenue-cycle services.

Conifer’s new board will consist of Mooney and two members each from CHI and Tenet. When asked about the size of CHI’S stake in Conifer, Swindle would say only that “ownership is enough to matter. It definitely will keep us focused working with them.”

The transition is expected to take less than two years. Currently, CHI employs 2,500 revenue-cycle employees. About 150 hold leadership positions and will become Conifer employees on July 1. The other CHI employees will join Conifer on Jan. 1, Mooney said.

Mooney said he is keenly aware of the timing of the announcement, coming on the heels of the Minnesota attorney general’s critical report about Chicago-based Accretive (April 30, p. 6). He said what differentiates Conifer from Accretive is its healthcare provider roots, coming from Dallas-based Tenet. Accretive is more focused on turning a profit, while Conifer takes a more patient-centered approach, Mooney said.

Last week, Accretive said it would convene a panel of experts to set national standards for patient collections. The company named former HHS Secretary Mike Leavitt to chair the panel and said other members would include former CMS Administrator Mark Mcclellan, former HHS Secretary Donna Shalala and former Sens. Tom Daschle and Bill Frist.