News & Releases

Help the Uninsured (Without Going Broke)

Jim Molpus, Kathryn Mackenzie, John Commins, for HealthLeaders Magazine
August 11, 2008

The number of people who can't pay much—or anything—for their care just keeps rising. Some hospitals have found new ways to help them while still protecting the financial health of the hospital.

Treating the nation's uninsured population is not a new problem for hospitals—but it's a problem that is only getting bigger. Even as the number of uninsured patients flooding healthcare facilities across the country grows larger, hospitals and health systems must find ways to care for those patients with limited financial resources amid the threat of government reimbursement cuts.

Is there any way to effectively manage the uninsured? Some organizations have decided that spending time and money on the front end—whether through initiatives like a physician/administrator committee that allocates resources for uninsured care or training frontline staff to be financial counselors—makes more sense than waiting for patients to accumulate massive bills later. For other facilities, the key to offsetting uninsured costs is the revenue resulting from integrating employed physicians into an ambulatory care network. But even organizations that have taken clear steps to deal with the uninsured problem now face an uphill battle.

Creative solutions Nowhere is the challenge of treating the uninsured more acute than in Texas. More than 5.5 million people, or 25% of the population, in the Lone Star State are uninsured—the most in the nation, according to the Texas Medical Association. The state's uninsured rates are 1.5 to 1.7 times the national average. As those numbers continue to climb, hospital leaders have been forced to take more creative measures to combat the problem. In Houston, where the uninsured rate has climbed to 33% of the city's population—or nearly 1.5 million people—leaders at Memorial Hermann Healthcare have searched for answers outside the walls of the system. The 14-hospital organization helped form a collaborative of 174 public and private safety-net health systems, coalitions, advocacy groups, and social service providers to guide the city's medically indigent residents away from emergency rooms and into a new network of primary- and specialty-care providers.

"The collaborative had to take aggressive strategic actions to deal with this situation. We saw that with the spike in uninsured, we were now going to have to shift our focus from internal efforts to external efforts," says Dan Wolterman, Memorial Hermann's president and CEO. That shift in focus eventually culminated in the Gateway to Care Provider Health Network, a corporation through which a network of physicians and supporting service providers have agreed to take a self-determined number of uninsured patients each month. Since the program's inception in 2000, Gateway to Care has brought $77.5 million in new healthcare funding to the region, says Carol Paret, board president for Gateway to Care and CEO of the Memorial Hermann Community Benefit Corporation. "Essentially we are building a community infrastructure so the uninsured will have a primary-care medical home other than the ER, with the necessary specialty care in the community to support the medical home," says Paret.

The program, which has opened 19 new federally qualified health clinics over the past eight years, operates on an annual budget of $1.8 million, says Paret. But quantifying the savings to the Memorial Hermann system is not an easy task, because the program is a collaborative effort between the hospital operator and numerous other Houston health systems, she adds. "The cost to each program differs, and each program has a different budget, but we all have the same ultimate goal of achieving 100% access to healthcare for the uninsured."

Wolterman says a key component to providing quality healthcare to the region's uninsured population is making sure they have access to specialty care. "We were seeing patients visit primary-care clinics and being diagnosed with a condition that needs a specialist. But since they have no way to see a specialist, they end up in the ER. We've restructured the system and created a new corporation solely focused on providing services to the un- and underinsured in the Memorial Hermann community," says Wolterman, who adds that the network has more than 1,000 physicians in all specialties who volunteer one or two slots per month to uninsured patients.

The Gateway to Care model also provides patients with a "nurse navigator" who helps direct them to the appropriate venue for care, says Wolterman. Navigators perform a combination of services associated with case management, such as outreach, eligibility determination, health promotion, referral, advocacy, and facilitation of service coordination.

Farther south, officials at the University of Texas Medical Branch at Galveston have given physicians more decision-making power in caring for the uninsured. The Demand and Access Management Program allows a senior group of physicians and administrators to determine how many uninsured patients the hospital can take on each month based on the hospital's available resources. Placing such limits on access to care may seem controversial, admits Mike Hill, interim associate COO at UTMB, but it was a necessary step for a system being stretched thin by uncompensated care.

"We tried to take as many unsponsored patients as we could for as long as we were able, but it has gotten to the point where he have had to make a determination about how to proceed," says Hill. The group's decision about whether to take on a patient, however, is always clinically based, he adds. "We log consults and pass that log onto the physicians who determine whether they can or need to see the patient based on clinical data and allocation. We have and continue to provide a tremendous amount of service to the unfunded. That's part of our mission—but like everyone else, we are limited in the amount of resources we can spend on uncompensated care."

Hill says surrounding counties send the hospital consults, and the hospital decides based on available resources and clinical evaluations whom it can afford to take care of, keeping in mind alternative health provider choices like urgent- and primary-care clinics. UTMB's program also seeks to educate patients on available services in their area, encouraging counties to provide as much primary care as they can. Hill emphasizes, however, that although the system has had to place limits on the number of uninsured it can handle, the decision is never based solely on allocation and does not apply to emergency room patients. He says physicians may choose to refer a patient to other less expensive healthcare venues only if the patient's case is not critical or if the patient can be treated just as well at a local urgent- or primary-care clinic.

Devon Herrick, a senior fellow with the Dallas-based National Center for Policy Analysis, says UTMB's DAMP program is actually not all that uncommon as more hospitals find they have to limit the number of nonemergency uncompensated care cases they accept in an effort to remain solvent. "They are all attempting to get people out of the ER into a lower-cost setting," says Herrick. "They are also taking steps to reduce fraudulent use of the system by patients who don't qualify for care either based on geographical location or because they exceed income limits."

Herrick points to a strategy at the publicly supported Parkland Health and Hospital System in Dallas—which has the primary responsibility of providing medical care to the indigent of Dallas County—to verify place of residence and sometimes income level to prevent fraud at the hospital. Because Parkland is supported by county taxes, only people who live inside the Dallas County borders can qualify for the hospital's charity program (for those with no payer source). However, hospital administrators began identifying cases of people who came to Parkland from nearby counties and gave false information in an effort to qualify for the charity programs.

In November 2006, the hospital implemented a fraud-detection system, and the hospital district's police staff began working with the district attorney's office to pursue criminal charges against patients who fraudulently received treatment at Parkland. Since then, hospital police have received 481 cases of patients who gave a false address or financial information to avoid payment; the police force has referred 58 cases totaling $1.9 million in lost hospital fees to the DA's office for prosecution, says Lt. Rick Roebuck of the Dallas County Hospital District police force. As of July, the DA's office has achieved 27 convictions resulting in court-ordered restitution of $786,470. "The investigations are ongoing, but now there are safeguards that have been put in place to prevent future fraud. Our intent is to halt fraud altogether, and we think that once people see we are actively pursuing these cases, they will quit attempting to get on the program fraudulently," Roebuck says.

Front-end work
Like healthcare providers everywhere, Orlando Health, the seven-hospital nonprofit system in central Florida, has borne the expense of the double-digit growth of the uninsured. "The cost of charity care alone in fiscal 2007 was $59.2 million. In 2006 it was $49.5 million. So we've seen a significant increase in one year," says Keith Eggert, Orlando Health's vice president of revenue management. "The financing of healthcare basically comes down to a delicate balance of trying to stay ahead at the end of the day with the claims that you actually do get paid on." Orlando Health, which changed its name from Orlando Regional Healthcare in May, emphasizes front-end strategies to help offset rising costs related to uninsured patients—starting with properly trained staff. One of the first people a patient meets at the hospital is the data-entry clerk, so Orlando Health leaders decided to give their data clerks a more-involved role—that of financial counselor.

"Historically, they were considered very clerical in nature, and in some organizations that classification still exists. We changed the mindset years ago," Eggert says. "Our philosophy is, ‘If I am registering you, it's a face-to-face discussion. It's my opportunity and my job to answer all of your questions and take care of your needs at a one-stop shopping perspective.' We've done away with the attitude of, ‘I'm a clerk. I only intake information and put it into the computer. Someone else will speak with you about your financial counseling needs.'"

New employees take a mandatory six-day training course before they're designated a financial counselor and assigned to a hospital. In addition to quarterly reassessments, Orlando Health uses Registration Quality Improvement to assess the work of its financial counselors. "It's an artificial intelligence system that does 100% quality assurance on every single registration activity in our system every day," Eggert says. "So every single financial counselor gets an accuracy rating every day that is cumulative by the week, by the month, and by the fiscal year."

The system lets Orlando Health monitor the amount of money that every counselor is collecting versus the amount of money they should be collecting. "We have performance statistics for both components: the accuracy of what they are doing, and what are they doing in the way of collecting the dollars at the front door," Eggert says.

The financial counselors try to ascertain how the patients will pay for their care. If the patients are uninsured, the counselors try to determine their eligibility for Medicaid or any state or local charity care options and let those patients know what their payment options are as soon as possible. "For whatever reason, there is a significant portion of the charity-eligible population that never applies for charity—either they don't know how or there is a pride factor involved," Eggert says.

In the emergency department, for example, Orlando Health's financial counselors interview patients and create a demographic at the point of triage, Eggert says. Once the patient is seen by a physician, a counselor returns to the bedside with a wireless device to complete the registration and take down insurance information when applicable or a financial statement if the patient is uninsured.

When the screening is completed, Orlando Health outsources its Medicaid eligibility functions to several companies that follow up with the patient in the hopes of obtaining some Medicaid benefits to defray expenses. If the patient is admitted, the eligibility companies do the screening at the bedside to get the process rolling as soon as possible.

Eggert says collecting money from "tweeners"—those patients who don't qualify for charity care and who also don't have health insurance—is a little more complicated. "We give a 40% discount off a charge across the board to all uninsured patients. But literally that is the population where there is nothing you can do other than establish a payment arrangement or obtain some sort of loans," he says.

Since the implementation of the financial counselor roles three years ago, Eggert says, Orlando Health has seen "an immediate 25% increase in our point-of-service and pre-service collections. We are pushing $10 million this year in pre-service collections. We were hovering in the $5 million to $6 million range annually before we put in the full-blown, cross-trained financial counselor role three years ago."

At Shands Healthcare, the eight-hospital health system serving Jacksonville, Gainesville and northeast Florida, the push for financial responsibility also starts at the point of service whenever possible, says William Robinson, senior vice president and chief financial officer. Shands has seen its free healthcare for eligible patients—not including bad debt—grow from $60.9 million in 2005 to $103.5 million in 2007. "We do spend some time up front with financial counseling and the patient. We do that when we can for most nonemergent care where you can identify the person with weak or no insurance coverage," Robinson says. "You can start to talk to them about the likely costs of the care and the best way to pay for it. You create a dialog early, and the better the dialog, the better the outcome."

Robinson says Shands collects about 1% of its net revenues—between $11 million and $12 million annually—from all of its point-of-service payments, including copays, deductibles from the insured, and partial payments from the uninsured. But one strategy that Shands and Orlando Health are not pursuing is the use of medical credit cards or medical loans with outside third-parties. Eggert says there is too much instability and turnover in the field, with companies constantly folding; Robinson agrees that there is too much potential downside. "You're putting someone between you and the patient," he says. "I might get some money for it, but ultimately someone else is going to pursue that patient, and they might use different pursuit tactics than we would feel comfortable with. It's still my patient and it's still our community, and I would get a black eye for it."

Further complicating the uninsured equation is the fact that just because someone is uninsured doesn't mean he or she is indigent. Sheila Schweitzer, CEO of CareMedic Systems, Inc., a St. Petersburg-based consulting firm, says a review of CareMedic clients' patient mix found that 31% of the self-paying patients whose accounts ended in bad debt were wage earners making six-figure salaries or greater. "It's not that patients don't have the ability to pay; it's that the industry has not caught up with the shift of first-dollar payers yet," Schweitzer says. "Service providers don't know when to ask, how much to ask and how to deal with their patients on a self-pay basis."

Part of the problem, Schweitzer says, is that the healthcare industry is in the middle of a cultural shift toward a retail environment and that hospitals have been slow to adapt to the new reality. She says healthcare providers must be able to give patients a front-end assessment of their financial obligations and determine their ability to pay. "The real key is to have the patients understand their obligations at the beginning of the process so you have less ill will at the end," Schweitzer says. "Traditionally, that has not been the way the healthcare industry has worked. In fact, it's almost been the exact opposite."

All about integration
Employing hundreds of primary-care physicians is not an option that many large health systems would treat with much sanity. Why hire a group of doctors who are reimbursed at such a low level? To some hospital and health systems, employing large numbers of primary-care physicians and integrating their care into a series of ambulatory clinics is not an option. But to Montefiore Medical Center in Bronx, NY, it is the only option.

The payer mix among the 1.4 million people of the Bronx is unforgiving. There are 350,000 uninsured, says Steven M. Safyer, MD, president and chief executive officer of Montefiore. Additionally, 80% of residents who do have insurance—an estimated 650,000 people—are on a government payer, predominantly Medicaid. "We have embraced our community, but we have not embraced it forever," Safyer says.

The medical center decided the best way to embrace the community was to keep the doctors from fleeing to other boroughs with more commercial customers, and the only definite way to keep those physicians was to employ them. And to employ them, there had to be a way to pay them.

Montefiore owns three hospitals with 1,228 licensed beds, taking in more than 70,000 inpatient stays a year. As Safyer says, "Medicaid in New York state is a decent payer to the hospitals and a very poor payer to the doctors." Those patients who are uninsured are put on a state program for emergency Medicaid eligibility. To collect those funds, Safyer says Montefiore employs more than 600 finance staffers. "That is an expense and a bureaucracy. It is backward. But I hire those people because in the end their expense is lower than the revenue I can reclaim by getting them on Medicaid."

The revenue from the inpatient side allows Montefiore to supplement an extensive, ambulatory care network that includes a 350-member primary-care group and sees 2.5 million outpatients a year. Follow-up care is provided by a hospital-based home health agency that sees more than 400,000 annual visits.

To manage the patient population, Montefiore also takes capitated risk in government and commercial payers. "We have about one third of our revenue coming in through an IPA, which is the doctors and all the ancillaries and the hospitals. It is about $650 million a year. We make that work not in the way traditional managed care companies have. We don't deny the care or prevent access to care. We manage the care. So it is a prepayment system. That has been very good for growth and good for the economics," Safyer says.

"We are really a large ambulatory care system with some big hospitals. The economics are simple: To make whole the employed physician community—which includes that ambulatory care network—we have to move about $90 million into that system a year. It is not exactly apples to apples, but $90 million would triple our bottom line. It is money a lot of systems would target for profit, which we are plowing back into the care system."

Not all hospitals—even large urban academic medical centers—have the funding levels that New York state provides, but Safyer says the key that allows Montefiore to provide care for the uninsured and underinsured without threatening the system's financial health is its level of overall integration, especially employing physicians. Those tools have allowed Montefiore to stay viable in the Bronx.

"We provide complex care to a huge population," Safyer says. "We do heart transplants, kidney transplants; we do sophisticated and innovative surgery of all sorts. We provide them to a borough that is 80% governmental payers and has 350,000 uninsured patients. Some academic medical centers would simply either move, which we could not do, or just attract patients from another borough."

Being so integrated also allows the physicians at Montefiore to overcome any headaches over treatment and payment. "There is no financial stigma associated with the patient status," says Stephen Rosenthal, vice president of network care management and president and COO of Montefiore's subsidiary care management organization. "There are rules and regulations and guidelines, but we try to make the patient's experience consistent so we don't have physicians looking at patients differently because of reimbursement issues."
—Jim Molpus, Kathryn Mackenzie, John Commins

Creative in Memphis
Methodist Le Bonheur Healthcare in Memphis, TN, faces a daunting uninsured burden in a city plagued by significant poverty. For senior leaders at the seven-hospital system, traditional solutions are simply not enough—they have been forced to find innovative ways to address the community's tremendous need.

Gary Shorb, president and CEO of the faith-based system, points to two significant strategies at Methodist:

1. Last year the system launched a program to link nonurgent emergency department patients with a community-based medical home. The program, which is a partnership between Methodist University Hospital, the University of Tennessee Health Science Center's Preventive Medicine Department, and a number of local community clinics, was born in part from a university-initiated survey of patients in EDs across Memphis that showed that 64% of those patients were unaware of other healthcare resources that were available to them.

2. More than half of the uninsured patients who come into Methodist emergency rooms are also regular visitors to the city's hundreds of churches—so it was a logical next step to tap work with local congregations to help church members find the best avenue to receive the care they need, Shorb says ("Faith in the Hospital" April 2008). Methodist's Congregational Health Network Partnership creates a tangible connection between the church and the health system. "We saw the potential to improve not only the care we deliver to our patients, but also to improve the quality of life for our community," Shorb says.

The partnership places a so-called "navigator" in each of the more than 100 affiliated congregations that have agreed to a covenant with the hospital system; the navigators help direct church members to the best avenue for their particular health needs, which may or may not include referrals to Methodist. "The idea is that the navigators become more than just a healthcare worker telling the congregation where to go or what to do. They become trusted members of the congregation who really care about the community's healthcare needs," says Shorb.