That'll Be $49 Million, Please

Philip Betbeze, senior editor, finance , November 26, 2007

Everyone knows that hospital treatment can be expensive, but this is ridiculous. A software glitch at a southern Arizona hospital in July, coupled with a failure to manually review bills for errors, meant a $49 million bill was sent to one of the 587 patients who received gargantuan hospital bills in error that month.

Nashville-based Healthcare Management Systems, which processes statements for Northern Cochise Community Hospital in Wilcox, AZ, took the heat for the errors, saying they usually check the statements manually, but didn't this time because they had a high volume of bills that day.

It's like the proverbial stories about the $50,000 hammer or the million-dollar toilet seat that the Pentagon orders. You just kind of laugh and move on. At least everyone recognizes the ridiculousness of a $49 million patient bill. But a mistaken bill for $100,000, which also came to one of the 587, might not attract as much attention in today's world.

Still, the fact that such a story made the newspaper is cause for optimism that things are getting better. Inscrutable and mistake-prone billing were all-too-common in the era of paper-dominated processes at hospitals. Hospitals have made significant strides in improving billing and collections over the past decade or so. The move from paper processes to computer-assisted registration, billing and other back-office chores has increased the accuracy of hospital financial transactions and reduced the need to carry so many full-time employees in those areas--thus boosting hospitals' bottom lines.

The new frontier now is the physician office--especially the small physician office. While a $49 million bill would rarely leave the premises of such a mom-and-pop facility, many still have a tough go at making their practices financially viable as they continue to operate biplanes in the supersonic era.

Some help is on the way, however. Even late-adopters are embracing new software for billing and medical records as either do or die. And thanks to better and cheaper design, billing services don't even have to use on-site software anymore. I'm writing a story for the December issue of HealthLeaders magazine that details how a new practice management system and an integrated EMR kept a small Washington state physician practice from going belly-up. Internet-based applications with accompanying tech support are taking the place not only of paper processes, but also of "dumb" legacy computer systems that can't keep up with the ever-changing complexity of healthcare billing and collections.

In the case of the practice profiled in the story, the savings generated from transcription, dictation and coding alone paid for the subscription fee, and it additionally dropped the physician's accounts receivable days from about 90 days to near 10. But for now, you'll have to wait for it. The story, that is. Until then, watch out for those $49 million bills.

Philip Betbeze is finance editor with HealthLeaders magazine. He can be reached at

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