'Money-hungry' tactics raised alarms at Fairview

Fairview employees complained about the new approach to collecting money soon after Accretive arrived.

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Minnesota Attorney General Lori Swanson produced a six-volume report detailing Accretive Health's tactics for getting Fairview system patients to pay their bills.

Photo: Jim Mone, Associated Press

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Just months after a consulting firm swept into the Fairview system with a new approach to collecting money from patients, hospital employees were expressing alarm and frustration, records show.

"We are giving the image that we are money-hungry," one said. Said another: "The patients are being bombarded by phone calls."

Their concerns soon would spread.

In the past few weeks, Fairview and its consulting firm, Accretive Health, have faced an outpouring of criticism over high-pressure tactics exposed in an April 24 report by Minnesota Attorney General Lori Swanson.

But internal documents, including hundreds of private e-mails, show that warning signs were mounting soon after Accretive arrived in early 2010.

The documents included in Swanson's six-volume report illustrate a behind-the-scenes struggle after Accretive was given nearly total control over the hospitals' revenue collection. They also reveal that hospital officials were voicing serious doubts about Accretive's competence and tactics long before Fairview cut its ties to the firm last month.

Accretive defends its record, accusing Swanson of distorting the facts and saying it strives to help patients understand and manage their hospital bills. It approaches patients with compassion, it says, and "never in a way that interferes with timely care.''

Fairview, meanwhile, has acknowledged making mistakes. "We know that [some] patients did not have the experience they deserve,'' Fairview said in a written statement. "Our message to them is this: We're sorry. We know we have work to do to restore faith and trust in our organization."

Financial pressures

In July 2010, an Accretive consultant named Brandon Webb was clearly unhappy with collections at Fairview Southdale Hospital. "If these are truly our numbers, we have a lot of work to do," he wrote in an e-mail.

It was just three months into a new era at Fairview.

Fairview had hired Accretive, a Chicago consulting firm, in March 2010 to help reduce its hospitals' bad debts -- the amount patients owed but never paid. Like hospitals everywhere, Fairview was under pressure from a weak economy and a changing insurance landscape that leaves patients with higher shares of their bills.

Records show Fairview's hospital bad debt had actually been falling since 2006, to one of the lowest rates among Twin Cities hospitals -- roughly 1.5 percent of operating expenses.

But Fairview CEO Mark Eustis, who had come on board in 2007, said he believed Accretive could do a better job.

Accretive quickly rolled out a new initiative. Hospital employees were told to check all incoming patients to see if they had a prior balance, or unpaid debt -- and if so, press them to settle up on arrival.

Hospital employees struggled with the new rules, the e-mails show, and managers weren't pleased.

"These numbers look awful this month," wrote Webb, the Accretive "site lead" at Southdale and Ridges hospitals.

"It's noon, and we are only at $5,000," wrote Jena Anderberg, a Fairview business services director, in October.

By then, Accretive, which was given the power to hire and fire hospital employees, was taking a hard line. "We've started firing people that aren't getting with the program," wrote Accretive's Andrew Crook to Fairview executives in September 2010.

Swanson later said Accretive's arrival set off "culture wars" within the hospitals, and by September 2010, an employee survey bore that out.

Asked how they felt about collecting money from patients arriving at the hospital, 35 percent said they were comfortable with it; 40 percent said they weren't.

"Let's face it, sometimes when people are in crisis the last thing they are thinking about [is] the cost," one said. "I realize that times have changed, but are we pushing the envelope too much?"

In November 2010, complaints were filing in from patients and staff members. One administrator complained that financial counseling at the bedside was "holding up his rooms" in the emergency department, and suggested that it wait until the patient was discharged. Anderberg replied: "I have tried that model at Southdale and we lost hundreds of thousands of dollars in patients walking out the front door."

Meanwhile, Fairview officials were strengthening their ties to Accretive.

In November 2010, they announced that Fairview would become Accretive's first client in an ambitious new venture aimed at improving quality and lowering costs. Mary Tolan, Accretive's CEO, predicted it could cut Fairview's costs by 25 percent, nearly half a billion dollars, in five years.

But Accretive's revenue consultants were still searching for ways to boost their numbers. They offered gift cards, trophies and $40 bonuses to hospital employees who collected the most.

The new rules weren't just about collecting old debts. They also sought payments from patients with no prior balances, to cover co-pays or deductibles before treatment.

'Poetry'

By mid-2011, e-mails suggest that more patients were being approached for payment. Accretive's Bruce Frank singled out one employee who collected $1,875 from a patient. "I witnessed the entire event," he wrote on June 3, 2011, "and it was like poetry."

Some of the motivational tactics appeared to trouble Fairview officials. CFO Daniel Fromm objected to awarding gift cards to top collectors: "Do you also understand that this practice violates our corporate policy?"

In August 2011, Fairview official Joline Storla asked Accretive to stop posting employee names with the amounts they collected, saying it "may cross some HR [human resources]" line. Accretive's Peter van Riper replied that it was "critical for improving performance, and so we'll continue with it as-is."

In May of last year, an internal Fairview audit raised even more concerns -- that Accretive was violating the terms of a 2005 agreement with then-Attorney General Mike Hatch. The agreement set out rules to protect patients from overly aggressive debt collectors.

Fairview officials warned Accretive in September, October and November that it was still breaking those rules, documents show. In November, an internal Fairview review said Accretive had placed the hospitals at risk "due to ignorance of the AG agreement."

Fromm, the CFO, told the Star Tribune that Fairview took action as soon as those problems surfaced, including hiring an outside consultant to study why morale was declining under Accretive.

In January 2012, Fairview dropped Accretive as its debt collector; last month it cut all remaining ties.

Last year, in spite of Accretive's efforts, Fairview's bad debts rose by almost 45 percent, to $58.1 million. Fairview blamed several factors, including accounting changes, a soft economy and "increasing difficulty" in collecting the patients' share of the bills.

Today, Fairview officials say, they are making changes. "We're listening to our employees and patients and using this feedback to guide us in our actions."

Staff writer Glenn Howatt contributed to this report. Maura Lerner • 612-673-7384 • mlerner@startribune.com

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