Frantic activity with clinical and patient safety systems has kept a quiet revolution out of the limelight: financial systems are rapidly evolving as well. Billing itself has grown in complexity, but a higher level of patient payment responsibility has made it imperative for hospitals to develop a plan for getting paid even as initial care is being delivered. RelayHealth’s May 2008 acquisition of privately held HTP Inc. of Columbus, OH gives RelayHealth more connectivity services between patients, payors, and financial institutions that will help providers manage the growing burden of uncompensated care. With the acquisition, RelayHealth provides the most comprehensive set of services to automate and simplify financial management activities with patients and payors. We spoke to Ray Shealy, former president and CEO of HTP and newly named VP/GM of Financial Clearance Services at RelayHealth.

Give me an overview of HTP.

Prior to the acquisition, HTP was a 12-year-old company focused on healthcare connectivity. We had been an Inc. 500 company for a couple of years and growing rapidly. In Ohio, we’re certainly viewed as a technology company success story.

We offer RevRunner®, a solution set under a SaaS (software as a service) platform for hospitals and physicians. Customers have experienced tremendous ROI from using RevRunner. It is the flagship that fuels our growth.

Our second product line is for RHIOs. We run the health information network for the entire state of Utah. It’s one of the first, maybe the first, successful RHIO in this country that has financial sustainability. It’s more of an administrative-based RHIO instead of a clinical one.

A third capability of HTP is our payor software, Transaction Manager. We have around 25 payors using it to help them comply with HIPAA through our edits.

How did the acquisition come about? Were you surprised or were you getting feelers?

We were not actively looking to sell the company or to merge with anybody. However, over the past year or so, there was interest from the investment community and strategic partners wanting to acquire us. We were partnering with people and, within three or four months, they wanted to talk about potentially acquiring us. It was very common because the space is so hot and we’re fortunate to have strong technology.

When we thought about potential partners, RelayHealth was unquestionably at the top of the list of companies that could unlock the value in HTP’s technology. When they expressed an interest and began to pursue us, we certainly listened because we felt good about that. The ethics and the feeling about the management team and folks we were interacting with was outstanding. We allowed the conversations to get to different level with them than we had with anyone else. The rest is history.

What attracted their interest?

RelayHealth really understands that the front end of the revenue cycle is where healthcare needs to focus to maintain financial health. That’s right where HTP, with our RevRunner solution, is positioned.

It’s a very good fit with the large business that RelayHealth has. They have a comprehensive view of both financial clearance and financial settlement connectivity that providers need with patients, payors, and financial institutions. We just snapped into their existing portfolio. I think they were really impressed with our suite and the added value it brings to healthcare providers.

We do four things to help providers pre-service. We find and verify insurance coverage for those patients who have it. We optimize collection from those patients who can pay. We identify assistance for those who cannot pay. We empower our customers with the tools and information to know the difference between these three scenarios.

What does that mean to them? They collect cash – now. I think that was pretty powerful when you look at how healthcare has evolved. There are very few industries where you are considered best in class and you might get paid 60 days after you’ve provided a service.

What our service does for providers is empower them with the means to tell a patient, for example, “You’re scheduled to come in a week from Tuesday to get a CT scan. We’ve talked to Aetna and verified your insurance coverage. We’ve also analyzed the pricing contracts between Aetna and that particular hospital. You’re going to owe $850 out of pocket when you show up for the procedure.”

That’s a transformational event that supports consumer-driven healthcare where patients have more choice. It’s also in line with HFMA’s Patient Friendly Billing™ project. What typically happens today is that a patient gets a bill 45 days after they visited the hospital. They are unhappy because the bill was larger than they expected because, without their direct knowledge, their employer had raised their deductible. Now they have a $5,000 deductible instead of $ 500 deductible.

So now you’ve got an angry patient who says, “I can’t believe I owe $850,” and you’ve got a hospital trying to get the bill paid and waiting to collect the money. A lot of times, patients won’t pay either at all or on a timely basis. They’re healthy again and don’t feel they have to pay. Interestingly, people understand paying their veterinarian bills … and do pay these long before taking care of their own healthcare bills.

With our service, a provider can now educate the patient in a friendly way so they know upfront, “I’m going to owe $850.” The hospital can work with them to determine the optimal payment scenario for that patient.

The first step is really conducting a thorough analysis of their health plan coverage and validating that. We don’t just stop at checking the insurance the patient thinks they have. More times than people realize, patients often say they have no insurance when they actually do; or, they “remember” the wrong insurance.

Then, if our analysis indicates a high proportion of the financial obligation will need to be funded by the patient, we next evaluate their ability to pay. If they can’t afford it, maybe they’re eligible for the hospital’s charity program, Medicaid, or some financial assistance. Or, maybe they can pay for it but will need a payment plan.

All that can now be worked out upfront so everyone is educated. Our ability to connect to payor databases and financial institutions means we are presenting the most current and available information possible to help that patient accurately to understand their role and accountability in paying for their care service.

How do customers like the results?

Providers are very satisfied because they are able to move the patient cash collections to the point of service, which increases their cash flow and reduces their post-service effort required to collect. That’s a huge goal for every hospital in the country. Also, with the trend toward consumer-driven healthcare, you have more educated consumers who now don’t feel surprised or shocked when they get their bill. They know upfront what that procedure is going to cost. They can make informed and better choices.

Will that kind of pre-service activity pick up as financial responsibility shifts more to patients themselves?

Absolutely. The trend is going to continue. A couple of years ago, $5,000 deductible plans were considered to be fairly high. Now they’re commonplace. You even see $10,000 deductible plans. As the patient payment responsibility continues to increase, it increases the need for providers to be able to do patient-friendly financial counseling where they’re educating the patient on what their out-of-pocket is going to be in terms the patient can understand. Consumers get this every day in making every other purchasing decision – and now they will receive this informational service with healthcare as well.

Some services, like the Propensity-to-Pay assessment, may not interest hospitals that don’t collect aggressively. Do you find that customers are using more of your tools as reimbursement gets tighter?

They definitely are. I think if you go back just a couple of years, people really frowned on those types of processes, but it helps the hospital determine upfront the optimal payment pathway based on the patient’s propensity to pay.

They can often write it off or send it to collections on Day 1 instead of spending time and money trying to get a bill paid when they’re never going to pay. From a hospital’s perspective, you can spend $1.50 collecting $1.00 and it’s not worth it. If you can spend 15 cents upfront to collect $1.00, that’s obviously worth it.

The further you go along the revenue cycle, the higher the cost to collect. In the healthcare vernacular, we’re triaging patients to determine their optimal payment pathway. For example, if a patient doesn’t have insurance, the Propensity-to-Pay analysis may lead us to say, “We see you may be eligible for Medicaid. Meet with our financial counselor and let’s see.” Or maybe they are eligible for charity care. One scenario often happening is, “We see that you have insurance, but it’s fairly light, so we’re going to have to work out a payment plan for you personally.”

How much does the average hospital leave on the table?

We do a simple upfront analysis free of charge for hospitals. We’ll run a hospital’s self pay and bad debt. Over the last three years, we’ve found that four to 15% of patients tagged by the hospital as self-pay actually have some kind of Medicaid or commercial coverage.

A fairly large system found over $9 million in 2007 by using our technologies, where people walked into the hospital and said they were self pay, but actually had either valid commercial or Medicaid coverage. That happens because of the complexity of life. You have divorced parents where a child may be covered under the other parent’s insurance or maybe they changed jobs and didn’t know about it. People often have insurance and don’t know it, the complexities are endless and hard to track in the absence of current technology.

Healthcare, historically, uses paper, phone calls and people going to websites trying to figure all this complexity out. We use technology to automate the connections to the payor and analyze data to find coverage and money when antiquated processes don’t.

People say they want healthcare to work like other businesses, where patients have a choice before incurring expenses and where they know what they owe immediately. Is that consumerism important to your business?

Absolutely. Pricing transparency was the first wave. We like to say, “You have an estimate – now what?” The estimate was great, but how can the hospital collect the money? Our solution for financial clearance not only provides that pricing transparency, but also provides an optimal payment pathway for both hospital and patient to work things out so that particular service gets paid.

It seems like after many years of focusing on clinical systems, the trend is moving back toward fundamental business systems. Do you see that happening?

Yes. As hospitals say, “No margin, no mission.” Unless you’ve figured out your revenue management processes and automated them and are operating efficiently, it’s hard for any hospital to stay in business. Healthcare is complex and the payor rules for reimbursement are constantly changing. In a manual world, it is very hard for providers to stay current.

You deliver your offerings by software as a service (SaaS).

That’s correct. We’re typically up and running and integrated with the hospital’s information systems within 30 days, particularly for the insurance verification services. That’s because there’s no footprint at all in the IT shop of the hospital or physician office. It’s all Web-based. There is no software to install, maintain and update on hundreds of users’ desktop computers. Training is simpler and faster.

Someone might take a quick look and say HTP looks like a clearinghouse.

We like to say, “We’re not your father’s clearinghouse.” We have clearinghouse capabilities, which are in fact best in class for eligibility and insurance verification, but the way we present the data and make it usable is what really distinguishes us.

For example, when providers now perform insurance verification, even with a standard HIPAA format, they see a different formatted and coded eligibility response from each payor. That’s because every payor response is different and providers use many main payors, it’s hard for staff to sort through clearinghouse eligibility data and find important data points like co-pay, co-insurance, and deductible year-to-date.

Instead of that approach, we present payor information in a normalized fashion that allows the hospital staff to quickly get to the data point about that particular consumer of healthcare that they’re looking for. This makes training much easier too.

There’s a feature called My View that allows them to sort those responses and see those data points. If they’re sitting in the emergency area, they can see their ER co-pay at the top of the list every time. That’s not how all the other clearinghouses work for eligibility.

We have proprietary technology that provides more comprehensive data from a payor than you can typically get in traditional HIPAA eligibility inquiries. We’re able to get very key elements, like deductible year-to-date met, coinsurance, and a lot of other data points that you typically won’t get through a clearinghouse. We’ve invested heavily over the last three years to build out this network of advanced payor connectivity. That’s a big differentiator.

Our mantra is to make the data usable. We do some other things with our workflow and work lists. We sort through the data to find the needles in the haystack for those actionable events that the revenue cycle staff person is looking for.

What causes a hospital to recognize they need to improve their practices and come to you for a solution?

A number of providers now realize that automating the connection with payors and financial institutions rather than relying on paper and endless phone calls is the right and only way to go. Certainly the move toward consumer-directed healthcare is forcing hospitals to be smarter about how they go about getting paid upfront. If they don’t do that, they’re at risk of going out of business.

We have a very solid process for how we go about proving our ROI before the customer signs a contract. For example, we can run an analysis to find out how much money they could go bill tomorrow if they were using our technology. That’s pretty compelling to most systems, even if they don’t have a budget for it.

What we’ve seen in the last 12 to 18 months is a tremendous interest in this more advanced connectivity during the revenue cycle. With our direct sales team and with our solution now part of the RelayHealth connectivity business under its nationwide reach and huge penetration into healthcare, we’re really excited about the opportunities.

You have a wide enough customer base that integration shouldn’t be a challenge.

Correct. We’ve already integrated our service with most of the leading hospital information system platforms. We have very good references and our KLAS ratings are strong.

Your newest service is Charity Care Compliance Manager. What does that product do?

There’s a growing storm in the industry. The IRS is changing its guidelines for how hospitals maintain their non-profit status.

The IRS Form 990, Schedule H change makes it more difficult for hospitals to receive the same level of credit that they used to receive for charity care. Those changes have a lot to do with using actual charges instead of billed charges. I’ll spare you the details, but that’s a growing concern as the non-profit status of hospitals around the country is being challenged.

It’s voluntary to fill out the new Schedule H in 2008, but it will be required in 2009. You have to be able to document that you’re tracking and managing your charity care appropriately. Charity Care Compliance Manager helps hospitals do a much better job of effectively classifying bad debt vs. charity. We think this will be a huge event that providers are just starting to realize this impact of 990H.

What benefits will customers of RelayHealth and HTP see with the acquisition?

RelayHealth has industry leading connectivity services through its intelligent network. When you combine RelayHealth’s huge presence and large installed base for claims management services, patient statements and online account management services, and then you put HTP customers on the front end of that with financial clearance services, you have a very complete offering for helping hospitals and physicians optimize their revenue cycle.

What changes do you expect over the next 3-5 years?

We will continue to see an increase in consumerism. The burden of the cost of healthcare will continue to be pushed directly to consumers. That’s going to drive more choice. Hopefully that will have the effect that we’re all looking for, which is to bring the ever-growing healthcare costs under control.

It shouldn’t be a strange question to ask your physician or provider, “How much is that going to cost me?” Today they may look at you and say, “Why are you asking that? Don’t you want the best healthcare possible?”

I think we’ll see a change with consumerism from that being a strange question to a common question, one that providers are going to be answering. If they can’t answer it, they won’t be in business long because people will go elsewhere.

Fast Facts

Product
Financial Clearance Services

Company
RelayHealth
1564 Northeast Expressway
Atlanta, GA 30329-2010
Phone: 800.778.6711
www.relayhealth.com

Notable Customers
Catholic Health Partners, Tenet Healthcare, Resurrection Healthcare, OhioHealth, Redlands Community Hospital , The Ohio State University, the Utah Health Information Network.

The Bottom Line
* RelayHealth’s front-end revenue cycle connectivity services help providers find the best way for patients to pay for services received.
* Software as a service (SaaS) means a fast implementation and quick return on investment with minimal use of internal IT resources.
* RelayHealth is perfectly positioned to deliver the financial and clinical tools needed in an increasingly consumer-centric healthcare delivery model.

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