Update on Healthcare Collections from the March for Success Conference

In mid-April, Michael Lamm and I headed to Las Vegas for ACA’s 2008 March for Success healthcare conference. It was nice to escape the dreary and cold Washington D.C. weather and replace it with the sunny skies and low humidity of beautiful Las Vegas.

What we really liked about this intimate and focused show (versus some of the larger healthcare conferences) is that instead of being herded around with masses of people, attendees had the opportunity to hold meaningful networking conversations and to attend educational sessions with relevant content. Kudos to the ACA for keeping this conference off the Vegas strip for the second year in a row to encourage conference participants to remain at the hotel for networking and sessions.

Michael Lamm’s Thoughts:

It was evident from my conversations that many healthcare agencies had experienced record liquidation results in Q1 compared to previous quarters despite the market volatility. However, those with hospital clients in hard-hit subprime-prone states like California, Florida, Ohio, and Michigan said that they were definitely seeing an impact on liquidation results.

Many attendees asked me if we expect M&A to continue to be active in the healthcare arena like we saw in 2007, and the answer is definitely, yes! We expect continued interest from private equity-backed medical collection agencies looking for add-on acquisitions, financial buyers looking for platforms, and strategic buyers looking to expand their services through meaningful acquisitions.

Michael Klozotsky’s Thoughts:

In this presidential election year, voters’ concerns about rising healthcare costs and the need for healthcare reform have garnered considerable attention. The reality, however, is that any material effects of reform efforts in Washington will take years to be felt by consumers, healthcare providers, or accounts receivable management companies—if the occur at all. In addition, the hypothesis that individual states would act more quickly than the federal government to adopt universal coverage legislation has been largely stymied by generally deteriorating economic conditions that have pushed healthcare coverage reform to the back burner.

That said, for healthcare collection agencies, debt buyers, and collection law firms, especially those that serve clients in more than one state, the complex array of state laws related to medical debt can be daunting, For example:

In Connecticut: patients with medical debt must be assessed for charity care eligibility. And healthcare creditors and their agency partners may not collect more than the cost of services from uninsured consumers.

In California: Medical debts cannot be reported to credit bureaus until a 150 day waiting period has expired. No interest may be charged on low income or uninsured patients’ healthcare debt.

In Illinois: Legal action to recover medical debts is prohibited. (The same restriction holds in CA and CT.)

In Arkansas: the statute of limitations for collecting medical debt is two years from the date of services rendered or the most recent payment from the patient, whichever is later.

The key takeaway from these few examples is the importance of paying careful attention to legislative changes across the country that will affect how creditors and service providers collect delinquent medical receivables.

Finally, while acknowledging the challenge of attracting healthcare finance professionals to a conference sponsored by an collection industry association, events like ACA’s March for Success would benefit from greater participation by healthcare creditors. Mid-sized gatherings are the perfect venue for meaningful dialogue between hospital and physician personnel responsible for receivables management and the companies in the ARM industry that support them. Deliberate efforts to expand the pool of attendees among healthcare industry representatives would serve all parties involved.

We would welcome any insight from other constituents of the healthcare collection industry on how they are fairing in the market and what opportunities they are seeing as they navigate through this volatile economy.

Michael Lamm manages M&A transactions and Valuations for Kaulkin Ginsberg’s Strategic Advisory Group. Michael can be reached at 240-499-3808 or at mlamm@kaulkin.com.

Michael Klozotsky conducts custom research projects and writes publications focusing on the healthcare sector of the accounts receivable management industry for Kaulkin Media. Contact Michael at 240-499-3836 or mklozotsky@kaulkin.com.