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The Path to a Partnership

Mergers and acquisitions in the health care sector are expected to be robust in 2018 and continue to grow based on strong activity in the market, and trends such as the shift to value-based care models.  According to the Corporate Advisory Solutions (CAS) fourth quarter 2017 newsletter (https://bit.ly/2KjAn9R), at press time, mergers and acquisitions in the revenue cycle management sector have “remained consistent and we anticipate seeing a high level of activity in 2018.

Technological advances will dominate the conversation for RCM companies and health care providers. 2017 required health care organizations to respond to several challengaes and transformative trends, including the political landscape change, growing role of technology, and shift to value-based care.  USCB America’s recent merger and acquisition of RevSolve Inc. and J&L Teamworks, two health care-related industry leaders, is an example of this trend and how to stay ahead in the competitive marketplace.

RevSolve, a Scottsdale, Ariz.-based company formerly known as Collection Service Bureau Inc., is led by Chris Becraft. The ACA member company founded in 1964 was rebranded as RevSolve, a firm that prides itself on being “the best-in-class revenue solution for health care providers,” according to a press statement on the merger and acquisition released by the USCB America.

J&L Teamworks, also an ACA International member company, was established in 1990 in Lodi, Calif., as a receivables management services firm that works with hospitals, medical groups, clinics and physicians. The company, which was previously privately owned and managed by two business partners, is now part of USCB’s family of employee-owned companies.  

“In today’s fast-paced and competitive environment, it becomes critical to look for avenues to retain tenured and successful employees and to broaden the services offered to our business partners,” said Albert Cadena, USCB America’s CEO and president.  The companies worked with CAS, a merger and acquisition advisory firm and ACA International member based in Philadelphia, throughout the process.

“In my almost 20 years of providing M&A advisory services to the outsourced business services sector, I have not seen a better fit culturally and operationally than what exists between RevSolve and USCB America,” Mark Russell, managing partner at CAS, said in a news release on the merger.  Cadena said the merger with RevSolve and J&L Teamworks was the opportunity he had been seeking.

“I have been searching for a merger/acquisition with companies who specialize in the health care side of our industry for the last eight years or so,” he said. “This was a direction and a goal we needed to move forward with in order to continue to be competitive in the marketplace, acquire talented employees and also to expand our geographical presence.”  Cadena added that the decision to seek agencies to merge with was motivated by needs of his clients in the health care space.

“Health care providers are seeking a partner to provide an array of services in revenue cycle management,” Cadena said.  “We also saw in the industry that smaller companies were seeking for an exit strategy and the expectations from the health care receivable side were making it difficult for some to compete.”  Meanwhile, Becraft shared his resolution for the future of the company.

“In deciding the next chapter of our 53-year-old company, we looked for a partnership that could bring further depth to our health care revenue cycle services, a commitment to expand our presence in Arizona, and a culture that complements ours and that of our clients,” Becraft said. “We nailed every criterion. We are also proud to now be a 100 percent employee-owned company as part of this merger, which is a tremendous benefit to current employees and a huge competitive advantage to acquiring the best talent for the future.

Our staff are really in top spirits about all of it. As employee owners, they have a chance to have more than just a career; they own part of the business.”  Like USCB America, RevSolve was also reviewing its strategic direction for the past few years and how it could capitalize on opportunities available through working with health care provider clients.

“We too needed to be larger, but more importantly, we need to be able to offer a deeper stack of revenue cycle services to our current and prospective clients,” Becraft said. “We had a lot of criteria that included market facing objectives, but also internal ones such as how can this help our employees grow in their careers with the company.”

With this in mind, RevSolve was faced with three choices, he said … “develop the services ourselves, acquire other companies or merge with a complementary company.”  And, according to Becraft, the merger makes sense given the same trend is going on in the health care market.  “Health care providers are merging at breakneck speed and their needs are growing ever larger and more complex,” Becraft said.

“The most successful revenue cycle companies are expanding their relationships across multiple lines of services with their clients.”  RevSolve and J&L Teamworks join a host of proud Employee Owners at USCB America, who offer a full enterprise of health care revenue cycle and management solutions, according to the press release from USCB. USCB America has been in business for over 100 years and has been an employee-owned company for almost two decades.

“In both J&L and RevSolve I have seen positive feedback for all the employees, as always the unknown is on the minds of all, and it’s up to USCB to continue on its path of bringing [us] all together as one family,” Cadena said. “I have seen a lot of employees excited about growth opportunities and the options to possibly transfer to other office locations.”

When asked his advice for other companies considering a merger, Cadena said start by taking a look at your long-term goals.  “For us it was to strengthen our family of companies and to continue to provide excellent service to our current and future clients,” Cadena said.

Federal Court Rules for Accounts Receivable Management Industry in Case Supported by ACA’s Industry Advancement Program

  • June 22, 2018
  • Published in Billing

The U.S. District Court for the District of Nebraska ruled in favor of the accounts receivable management industry in the April 2018 case of Robinson v. Accelerated Receivables Solutions (A.R.S.), Inc. and David W. Brostrom, 17-00056, 2018 WL ------- (D.Neb. April 19, 2018). The key issues in Robinson were:

Whether Nebraska law allows for the recovery of attorney fees or interest when suing to collect medical debt; and

Whether Nebraska law allows a collection agency to seek and recover an award of attorney’s fees when such fees are incurred by its in-house counsel.

The federal district court in Nebraska held that under Nebraska statute, creditors and their assignees are entitled to request attorney fees and interest on claims for “services rendered” and “material furnished,” which includes unpaid debt for medical services and supplies. 

The district court reasoned that regardless of how the collection agency characterized its claim in the state court, debt collection action as one for “services and supplies” rather than as “an action on account,” the medical “debts at issue were incurred for services rendered or materials furnished” and, therefore, fell within the scope of the Nebraska law allowing the collection agency to request an award of interest and attorney fees.

The district court also found that there is “no basis for disallowing attorney’s fees under [Nebraska statute] by reason of [the collection agency’s] employment of in-house counsel.” In doing so, the district court rejected the consumer’s argument that the collection agency was acting like “a law firm suing pro se, and attorney fees are not recoverable by pro se litigants, even those who are attorneys.” [Editor’s note: When a litigant proceeds without legal counsel, they are said to be proceeding “on one’s own behalf” or “pro se.”] 

The district court explained that while “pro se litigants cannot recover attorney’s fees,” there is no legal reason to define the collection agency as a “pro se law firm.”  In Robinson, the collection agency sought to collect payment from the consumer for unpaid medical bills. Through its in-house counsel, the agency filed a lawsuit in county court against the consumer seeking recovery of the debt, along with an award of pre-judgment interest and attorney’s fees allowed under Nebraska state law. 

The consumer responded by filing a class action Fair Debt Collection Practices Act and Nebraska Consumer Protection Act lawsuit against the agency. The consumer did so to try to end-around common practice in Nebraska in which collection agencies routinely request state law authorized pre-judgment interest and attorney’s fees.  Since the collection of pre-judgment interest is an important and integral part of ACA member businesses, ACA filed an amicus brief in the Robinson case on February 13, 2018. 

ACA submitted the “friend of the court” brief to support its member’s case, and to provide assistance and insight to the federal district court in Nebraska with respect to how the issues raised in Robinson have potential impact well beyond Nebraska. 

ACA asserted that if the district court were to embrace the consumer’s arguments in Robinson it would “subject [the collection agency] to liability for following a practice that many prior judicial precedents had authorized. To impose liability under these circumstances would violate [constitutional] due process. This Court should . . . apply the law in the same way that the Nebraska state courts have applied it for decades.”

ACA is encouraged that this important decision will positively impact its members’ ability to seek and collect payment of interest and attorney’s fees to which they are entitled. And had the consumer’s claims in Robinson been left unchallenged, the consumer’s counsel would be emboldened to continue developing a cottage industry of pursuing identical class actions lawsuits against various collection agencies and their in-house counsel throughout Nebraska on the same theories.

ACA International’s efforts to proactively support the accounts receivable management industry are part of the association’s Industry Advancement Program, and are made possible by funding through ACA’s Industry Advancement Fund. (https://www.acainternational.org/industryadvancement-program)

 

News & Notes

Seminar: Duties of Data Furnishers Under the FCRA

If you furnish data for consumer reports, you know the importance of applying the Fair Credit Reporting Act to your current business practices. ACA International will offer a CORE Curriculum seminar May 10 to help you incorporate the FCRA and Regulation V into your Compliance Management System. Participants will also learn how to recognize alerts and respond to claims of identity theft and fraud. Register here: https://bit.ly/2pInq0t

Health Care Prices Reach Five-Year High

Health care prices in February increased by 2.2 percent compared to 2016 and 2 percent in January, the highest rate recorded since January 2012, according to the Altarum Institute’s latest Health Sector Economic Indicators report.  National health spending increased by 4.6 percent compared to 2016. Altarum also reports the health care sector experienced modest job growth during the first two months of this year. https://bit.ly/2pHptCe

 

Health Care Costs Continue to Impact Consumers’ Decisions to Seek Medical Treatment

 

A new national poll shows that the cost of health care continues to impact whether consumers seek recommended medical care or visit the doctor when they are sick or injured.  The survey, from NORC at the University of Chicago and the West Health Institute shows approximately 40 percent of respondents skip medical care and 44 percent said they didn’t go to the doctor when needed.

“The February survey of more than 1,300 adults offers new insights into how Americans feel about the costs of health care and how they report those costs affect their medical decisions and personal finances,” according to a news release from NORC at the University of Chicago, a nonpartisan research institution.

Other findings in the survey include:

About 30 percent of respondents reported that they had to decide between paying for medical bills or essentials such as food, heating or housing during the last year.

More people fear the medical bills that come with a serious illness over being sick (40 percent versus 33 percent, respectively.)

Respondents who said they skip recommended medical care were about two times more likely to fear getting sick (47 percent versus 24 percent, respectively) and the costs of care (60 percent versus 27 percent, respectively.)

“The high cost of health care has become a public health crisis that cuts across all ages as more Americans are delaying or going without recommended medical tests and treatments,” Zia Agha, chief medical officer at the West Health Institute, a nonprofit applied medical research organization based in San Diego, said in the news release. “According to this survey, most Americans do not feel they are getting a good value for their health care dollars, and the rising cost of health care is clearly having a direct consequence on American’s health-and financial well-being.”

Respondents to the survey also avoid medications due to the cost. “About one-in-three respondents report they did not fill a prescription or took less than the prescribed dose to save money. Dental care also suffered. Nearly half say they went without a routine cleaning or check up in the last year, and 39 percent say they did not go to the dentist when they needed treatment,” according to the news release.  They also experience financial consequences due to the cost of health care and medical bills are often unexpected.

Over half of survey respondents said they have serious financial consequences due to the costs of health care. The consequences include using all or most of their savings (36 percent); borrowing money or adding to their credit card debt (32 percent); and lowering contributions to a savings plan (41 percent.)  

Over half of survey respondents also said they received a medical bill for care they thought was paid for through their health insurance and a similar amount said they received bills at a higher amount than they expected. More than 25 percent of respondents said a medical bill was sent to a collection agency within the last year.  

ACA International members may find more information on health care collections and billing practices through ACA SearchPoint™ (https://www.acainternational.org/searchpoint) using the health care tag.

More information on the survey:  https://bit.ly/2GggwWK

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