Healthcare Matters

The State of Minnesota has settled with Accretive Health.  The Chicago-based “medical revenue company” will pay a $2.5 million fine which will be used to compensate patients who were victimized by its alleged, bad behavior. The lawsuit, brought by state Attorney General Lori Swanson in January, followed an investigation into Accretive’s business practices. Specifically, it alleged that Accretive had violated state and federal health privacy laws through its aggressive collection tactics, including having its management “imbedded” into the staff of Minnesota hospitals and badgering patients for payments as a condition of receiving treatment (e.g. trying to collect a debt from a patient waiting to see a doctor in the ER).

In addition to the fine, Minnesota Attorney General Lori Swanson “is throwing the bums out.” That’s right, she has essentially thrown Accretive out of Minnesota, requiring the company to wind down its operations by November. Accretive will then be banned for two years outright and another four years after that, unless Swanson has a change of heart –which is not likely given all the vitriol.

Joe Anthony, a Minneapolis attorney representing Accretive, accused Swanson of putting pressure on the company for political gain. “She turned it into a media circus,” Anthony said Monday in a telephone interview. In its statement, Accretive said Swanson’s investigation “did not and could not identify a single patient” in Minnesota who had a bad experience with an Accretive employee or alleged they were denied care.

“Entering into this settlement agreement allows our Company to put this matter behind us and prevents further distraction from the important work that we do for our hospital clients,” Chief Executive Officer Mary Tolan said in the statement. And, as is par for the course in cases like these, the company did not admit to any wrongdoing. In fact, it does not expect the settlement to have a material adverse effect on its financial condition.

Oppenheimer & Co analyst Bret Jones said the settlement payment “means nothing” to Accretive, which ended the January-March quarter with a cash balance of $214.5 million. Resolution of the dispute removes a significant cloud hanging over the company. More importantly, it puts the risk of more lawsuits spreading to other districts to bed, Jones said in an interview. Accretive’s stock, which has fallen 7 percent since the lawsuit was announced in early April, rose 20 percent yesterday on news of the settlement.

Jones is probably right. $2.5 million is relatively meaningless to Accretive. But $25 million in annual revenues (previously earned in Minnesota) and the negative residuals that Accretive will continue to suffer are not. When news of the Accretive’s alleged, deplorable business practices hit the papers, the company’s investors and customers alike (politicians and major hospital systems throughout the US) couldn’t hide fast enough. Let’s hope the sting of that embarrassment lingers long enough to serve some good.

Businesses have a right to take reasonable steps, including punitive ones, to collect monies that are owed to them. Consumers have a right to know how much something is going to cost before they commit to payment. When it comes to bill collections practice, the healthcare industry may be the biggest offender of consumer rights. And that’s not even taking account of healthcare’s refusal to provide consumer pricing transparency and/or justify the fact that its pricing logic is seemingly non-existent.

—Tom Finn