Conifer Health Solutions Could Reshape ARM Industry, Competitive Landscape

Conifer Health Solutions’ entry into the medical receivables management market has the potential to not only change the competitive landscape for ARM professionals, but reshape the industry in ways not seen in nearly two decades, experts say.

The Tenet Healthcare subsidiary announced last week in an exclusive with insideARM that it is offering a full range of medical receivables management services, (“Tenet Spins Off ARM and Communications Business,” Nov. 6). 

ARM experts say hospital-backed medical debt collections companies are not new.  Many have standalone agencies collecting on their accounts. For example, an HCA Corp. subsidiary — NPAS of Louisville, Ky. — has been offering account receivables management services to non-HCA-affiliated hospitals, for about 18 months.

But Conifer’s move into debt buying could have more competitive ramifications for debt buyers because it was born of a health care provider that understands hospitals’ concerns about selling debt.

“(Conifer’s) entrance into the market won’t squash all other debt buyers, but it changes the game,” said Kaulkin Ginsberg Health Care Analyst Michael Klozotsky. 

Nonetheless, at least two medical debt buyers say they welcome the competition, especially since the field of buyers has shrunk from upwards of 20 companies nearly three years ago to fewer than half that amount in the last year.

Adam Holzhauer, president of San Antonio, Tex.-based Master Ventures, said a limited pool of buyers discourages hospitals from selling their receivables and can impact bids on available medical paper.

Holzhauer said he has heard rumors that a hospital recently tried to sell a small portfolio, but attracted few bidders. And the few buyers who analyzed the portfolio opted not to bid on it.  Holzhauer said the smaller pool of bidders coupled with the credit crunch has prevented some medical debt paper deals from being closed. 

“There have been some cases of a bid being won, but in the eleventh hour, (the buyer) changed his mind about purchasing the debt,” Holzhauer said.  “Getting some new blood will keep (medical debt purchasing) moving in the right direction.” 

Atlanta-based Capio Partners President Jim Richards agreed.  Richards said the biggest barrier to more medical receivables sales has been insufficient information and misinformation. He said Conifer’s presence in the market will make hospitals more comfortable with selling their self-pay receivables.

“The market still needs education and understanding about how it works,” Richards said.  “As they market their services they will educate more hospitals who will be aware of the benefits of selling late stage receivables.”

Experts say Tenet’s new subsidiary may also be modeling the benefits of service diversification. Mike Ginsberg, CEO of accounts receivable management advisory firm Kaulkin Ginsberg, said Tenet’s move to split off a highly-performing services unit mirrors a move made by General Electric in the 1990s.

“GE forged a path into India, offering captive BPO services, including ARM work,” said Ginsberg. “They eventually took on other clients and spun the company off into Genpact.” This move opened the offshore market for ARM.”

But Ginsberg warned that Tenet has to be very careful, as GE was, in pitching their services. “Many non-Tenet hospitals may not be comfortable outsourcing a key function such as receivables management to a company they regard as a competitor. They need to proceed carefully and deliberately,” said Ginsberg.