When Your Medical Billing Vendor Changes Ownership

June 20, 2012

There are five things you can be absolutely sure about when your medical billing vendor changes ownership. Here's how to prepare.

Okay, you’ve found out that your billing service has been purchased or merged with another billing service. Should you be concerned? In a word, yes.

There are a few things you need to be absolutely sure about:

• Are your current processes going to change? The answer is "probably," and this could be a good or a bad thing.

• Is your money still going to go where it went before and if not, where will it go and how will you get it? This information is needed for patient payments and small insurance company payments. Most of the other insurance companies should already be electronically depositing into your bank account.

• Make sure that the new company has a disaster plan and a compliance plan.

• Check and see if you need to sign a new contract with the new entity and how it may or may not protect you.

• Make sure you know who is going to take care of the old A/R and how. This is of paramount importance.

Some other concerns that should be addressed also apply to your cash flow and business processes. In doing research on mergers and acquisitions (M&A), I found a KPMG study (one of the "Big Four" accounting/consulting firms). This study said that 83 percent of these mergers/acquisitions end up being a disaster. Another study by Ivestopedia.com states the disaster ratio is 66 percent. Either way, it is not a comforting thought.

If the two companies use different computer systems for billing there is going to be a transition to one of the systems. If they are going to transition to the one that has all of your data, great. If they are going to transition to the other system, there may be hiccups in your cash flow.

Also, if they are transitioning to another system there is a problem with electronic data interchange (EDI) between clearinghouses and other insurance companies that may be submitted to in an electronic basis, directly. Those links are going to be changed. There is also the issue that the old A/R may have to be dealt with in a paper format versus electronically as most carriers only allow one EDI connection per practice.

Another place many articles on mergers and acquisitions state as a real problem for a successful transition is a “clash of cultures” between the two entities causing huge problems for them as well as for their clients. This was a direct quote from ACQ Magazine (one of the premier magazines on M&A). One of the chief reasons for failure often cited by companies who have undergone this change is that financial and legal matters take precedence over the brand and customer during the integration process.

Where the “clash” may also show up is if the two billing services are from different regions in the country. Each region has its own idiosyncrasies and as well as each specialty. Therefore, the comfortable association you had with your service could be compromised. The new company is not used to you and although the key people from the old company are kept around for a while, those contacts are now employees and responsive to their new employer not necessarily you.

There is one other short list of consumer concerns to consider according to an article at Helium.com. Helium is one of the largest editorial communities on the web. A. W. Berry, a financial writer, has written for numerous business websites and blogs, including the Houston Chronicle. Mr. Berry states that there are three items you need to keep an eye on:

1. Increase in costs
2. Decreased corporate performance/service
3. Potential lower industry innovation which adversely affects reimbursement

Is this to say that all mergers and acquisitions are bad? Absolutely not. I know of several that have worked out well. I believe that the more homogenous the corporate cultures are from the start, the better chance for success. When that happens, there is a very real chance you could get better service and better reimbursement due to more brains working on the problems. I am just suggesting that you keep your eyes open.

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