Private Hospitals a New Business Opportunity for ARM Industry

Physician-owned hospitals are on the rise again in the U.S., presenting major business opportunities for debt collectors and revenue management firms, a spokeswoman for the industry’s trade association recently told insideARM.com. 

Currently, there are about 150 physician-owned hospitals in the U.S., said Molly Sandvig, executive director of Physician Hospitals of America (PHA). Another 25 are now under development in Arizona, California, Louisiana, Pennsylvania and Texas.

Founded in 2001, PHA provides support, advocacy and educational services for the physician-owned hospital industry. The organization expects a growth rate of about 20-25 hospitals a year over the next five years, if unchecked by federal regulation limiting ownership.  

“If things go well in 2008, our industry will keep expanding quickly,” Sandvig said. “There will be new people out their looking for credible services.”

Sandvig said the industry frequently relies on debt collection professionals for help with its delinquent receivables, which equals about 4.5 percent of its net revenue. But with consumers becoming responsible for a greater percentage of their health care expense, physician-owned hospital operators are anticipating a greater need for revenue management help, including billing and payment tracking services.

“That’s usually one of the first things to go out the door as far as using an outside company,” Sandvig said. “It’s easier to separate out than anything else you can outsource.”

Sandvig said some physician-owned hospitals will need help because they have little or no experience with the billing practices for the new services they are offering.

“Often times our hospitals have been converted from an ambulatory surgery center or outpatient (facility) into a hospital,” she said. “Billing is a completely different beast. Sometimes the administration needs to bring in external parties to make sure things are up to speed on hospital billing.”

Still, it’s not unusual to find situations where the hospital operator just wants the convenience and legal protection that comes with outsourcing the service.

“The liability isn’t there,” Sandvig said. “If any skimming is going on internally, you’re responsible. If someone at another company is doing it, they have to pay you back.”