EXCLUSIVE: Tenet Spins Off ARM and Communications Business

Hospital operator Tenet Healthcare Corp. announced today that it is expanding and spinning off its revenue cycle management operations, forming wholly-owned subsidiary Conifer Health Solutions, Inc.

Dallas, Tex.-based Conifer (www.coniferhealth.com) will provide a full range of accounts receivables management (ARM) services, including patient pre-registration, debt placement, debt collection and debt buying, Stephen Mooney, head of Conifer Revenue Cycle Solutions, told insideARM. The company also will offer patient communications services, including 24-hour inbound communications, marketing services and physician referrals.

“The ultimate goal is to drive yield. To put more money in [hospitals’] pockets,” Mooney said of Conifer’s revenue cycle solutions division.

Mooney said Conifer already has more than 100 hospital clients, most of which are non-Tenet affiliates. He said those clients will be served by about 2,200 health care professionals dedicated primarily to revenue cycle management services working from offices in eight locations across the United States.   Currently, Conifer handles about five million patient accounts, worth about $9 billion, annually. 

Conifer also will buy self-pay receivables, which it will work in-house, Mooney said. In fact, the new company has already bought a portfolio of medical accounts receivable. The company expects more deals as hospitals look for cash infusions to expand services or buy equipment, Mooney noted.

While Conifer expects to be a major provider of ARM services, Mooney said Tenet will continue to outsource some healthcare receivables collection work to its agency network and partner with other ARM companies to provide best-in-class, integrated approaches to clients’ receivables management needs.

“We don’t believe we have the answers to everything,” Mooney said. “We will find the best in breed to find whatever the problem might be and the solution they are trying to obtain.”

Kaulkin Ginsberg Health Care Analyst Michael Klozotsky called Tenet’s move to provide healthcare revenue cycle management services “groundbreaking.”

“For an organization of the size and scope of Tenet, this is a big deal,” Klozotsky said. “It clearly represents or suggests a kind of progressive forward thinking about receivables that hospitals aren’t doing. This move on Tenet’s part has everything to do with developing a new revenue stream.”

Klozotsky also said Tenet’s entrance into medical receivables purchasing poses a major risk to other medical debt buyers because Tenet has the benefit of health care provider experience that other buyers can’t claim.

“In simpler terms, hospitals looking to sell medical account portfolios are going to potentially look to someone like Tenet with a bit of a softer eye,” Klozotsky sad. “There’s a level of identification and comfort that says ‘these folks are like me.’”

Mooney said Tenet’s expansion into medical ARM services was more opportunistic than planned.  Nearly a decade ago when the Dallas-based company began selling some of its hospitals, the new owners wanted Tenet to continue managing their accounts receivables. Tenet, however, wasn’t prepared to take on the responsibility. 

“The timing wasn’t right,” Mooney said. “We wanted to make sure we were operationally sound internally before we offered our services to others.”

Nonetheless, the requests for revenue cycle management help continued, Mooney said.  And as Tenet moved to centralize its revenue management operations (“Tenet Centralizes Program, Cuts Unpaid Bills,” Oct. 2, 2007), the market and regulatory challenges facing health care revenue cycle managers grew.

In 2007, Tenet hired a consultant who confirmed the market need Tenet was seeing, and the Dallas-based hospital operator began expanding its staff and infrastructure to support ARM and revenue cycle management services for other hospitals.  

“The opportunity is there and the market exists,” Mooney said. “We’ve gotten to the point internally where we feel confident we can support Tenet and new clients effectively.”

Mooney wouldn’t reveal Tenet’s growth expectations for Conifer. But he said “it’s clearly something we think will grow, otherwise we would not be going into the business.”