Do Emergency Departments Have A $30B Identity Problem?

Given the pressure to produce, produce, produce, most doctors squeeze far more patients into their day than they’d prefer, and often, the endless rush leads to many clerical mistakes. In the emergency department, the problem is even worse, as EDs handle immense, variable volumes of encounters which make it hard to allocate staff to meet patient care needs, much less check basic patient demographic and personal data for accuracy.

In both environments, it’s easy for patient name misspellings or identity mismatches to slip by. In fact, according to vendor MiddleGate Med, fact-checking and finding say, updated addresses for clients can be so taxing that many hospitals simply give up and send out bills which patients never see. This costs U.S. hospitals $30 billion per year, according to the company.

Right, hospitals write off more then 12 percent of all revenue on bad debt, according to some researchers. “That means they’ve already tried to clean up their database and get this right, and they haven’t managed to change it,” said one hospital executive.

MiddleGate’s new product, IdentiCare, is designed to help hospitals verify patient information quickly and accurately.  It comes as Web-based system, which then ties into the hospital database through an HL7 interface.  “We just want to make sure that the hospital has current and accurate information on them so you can get bills out of A/R.”

Another benefit, which MiddleGate doesn’t stress (but should) is that better patient identification techniques can help make sure that hospitals meet the FTC’s Red Flag rules requirements, which are designed to prevent medical identity theft.  Since hospitals aren’t used to following the standards set for typical creditors, any help here is welcome, no?

All that being said, has MiddleGate taken the right approach to closing leaks in the hospital revenue cycle?  Are there other pressure points which are equally important in improving hospital collections and profitability? (For example, might it be better spending time on how to streamline online communication, especially rapid claim adjudication, from the inarguably solvent carriers rather than chase down $20 co-pays?)  What do you think?

P.S.: By the way, a former client of mine estimates that if you don’t collect the co-pay before the patient leaves your office or ED, much less bill them accurately and quickly, less than 20 percent will ever pay at all.  I can’t vouch for that number, but my guess is that the CEO I worked with is right.  But I’ll share more of his conclusions in another piece.

About the author

Anne Zieger

Anne Zieger

Anne Zieger is a healthcare journalist who has written about the industry for 30 years. Her work has appeared in all of the leading healthcare industry publications, and she's served as editor in chief of several healthcare B2B sites.

2 Comments

  • This is just a reality of the existence of many “holes” of management in hospitals and other corporations that evolve unchallenged in a culture of copy-cat behavior. This is one of the “holes” that I worked on as an institutional leader up through the early 1990s. By then, I would only dive down into the ER clinical/financial (that invasively) if i couldn’t come up with other easier solutions that increased the ER’s collections ratio by at least 2% per year using much more basic techniques that did not place additional demands on staff.
    There are so many “holes”. Just yesterday I had to talk to a hospital and the post office delivery supervisor and a legal firm (hired to begin garnishing a friend’s wages), as an advocate for her. Her hospital bills (for three co-pays for hospital fees and professional provider fees of their affiliated physician practices– ER, EKG, CT) were going in her name and birthdate on them to a family with the same surname at a different zip code in a relatively small city.
    What precipitated the sudden garnishment was that that family suddenly moved and left no forwarding address and for the first time the hospital bills were bounced back to the hospital for the first time and a collections company researched the name and had them send it to the correct address.
    Now my friend is working with the mail delivery people who have been serving that old address to see whether the first names (including her husbands) popped up frequently over that 3 year period. But she now has two accounts with her name (first name misspelled in one) and still one with an address now showing up on some of her important documents with an address where no one with her surname lives.

    This hospital has a reputation for one of the slickest IT systems in our small state.

    In my salad days when I was green, I would pick out exact names with the highest frequencies that were not the usual names and have a medical records clerk “straighten out” the medical information and identify duplicate accounts and work with the billing staff to combine duplicate and triplicate accounts.

    As an aside, during that era I always found that “self pays” would pay 17-20% of charges.

    After 1984 making these corrections in accounts was much easier in large facilities because of the standard and ad hoc systems keyed to DRG’s and Major Diagnostic Categories. In the early 90s, I finally started using data mining and distributing the slices of the data for correction that would have the greatest return (on the provider side and on the Medicaid health plan side.)

    I always assumed that the systems would “catch up” and do automated scans. In the 80’s those scans were possible but the training and incentives did not seem to be in place (“that’s not my job” or “if any corrections are needed, that says that we are incompetent during our first try”).

    Some institutions would produce the reports automatically, but they would be put in drawers. I would go through the coding documents and get the name of the report for that vendor and ask a billing clerk “where do you store the ‘such-and-such reports’ and the staff would take me to file cabinets filled with a few years worth of them – unopened. Even in smallish practices and community clinics there was always a few hundred thousand that would plop out onto the floor with that revelation.

    $30 billion would be possible. I know that when some of the local academic medical centers or somewhat-safety-net hospitals are announcing huge losses in the local press, I offer to come in and pull a certain per cent of their tens of millions for them in 90 days, often pro bono. But those Press Releases are usually just a way of embarrassing their governor or legislators into bringing in more public funds.

    Fortunately no one ever takes me up on the offers, and a year later I find that they go a bump in reimbursement from somewhere.
    When I did this professionally as an occasional (paid) service, I used to have my time (local/remote) and cost down pat., but the last time was around 1998 when a large/complex institution wanted to phase out a $30 million government subsidy. I came up with the plan largely based on reimbursement quickly (starting with the ER) .

    When it was done, they served us champagne, and then told me that instead of giving up the subsidy, they had decided to finance and build a free-standing children’s hospital with the money.

    I about croaked, but just said that i would check-in and see how they were doing in 10 years. Ten years later the press release said that the childrens’ facility was bringing down the whole institution. The place is still going. Go figure!

    This whole area that you have identified is a management issue, not an IT issue. Someone at the top in administration or governance has to provide a framework that assures the necessary questions will be asked and that the data will be used. It’s not Star Wars stuff.

    Hope this is helpful starting a conversation long over due.

  • What an amazing set of stories Les! That’s quite the experience and history. From the way you describe it, it sounds like you’re saying that this is happening in every hospital around the country. Do you think that’s the case or is it just endemic in certain hospitals?

    I agree the conversation has been largely ignored. Comments like yours also makes me wonder why anyone gives large donations to hospitals. It’s honestly never made much since to me. I don’t mind donations to research or patients, but hospitals?

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