Dependicare's billing center paves way to greener pastures

Sunday, June 30, 2002

BROADVIEW, Ill. - When DependiCare established its billing department as a separate entity and moved it to dairy country 90 miles northwest of Chicago in 1997, President Roger Miller admits he had some trepidation. But as the billing center observes its fifth anniversary, it's clear the company found greener pastures in more ways than one.

Since opening the 3,500-square-foot billing center in South Beloit, Ill., in May 1997, DependiCare's DSO now averages less than 60 days for billed accounts and the collection rate exceeds 97% of revenue. Of the 14 original employees hired, 12 are still with company.

Impressive numbers, considering how badly things had degenerated - especially with staffing, Miller recalls.

"We had an especially hard time keeping people," he said. "It was difficult to find anyone with experience and when we did find someone decent, they'd take a job down the street for a few cents more."

Drastic times call for drastic measures and that was certainly the case with DependiCare when the suburban Chicago respiratory/HME provider's finances began to sour in 1995. During that year, accounts receivable days outstanding climbed to over 100 days, cash collections fell further behind by the day and the billing department's revolving door was a carousel.

External market factors were also taking a toll, such as the rapid growth of managed care in the Chicago market and Medicare reimbursement volatility. So Miller and V.P. of Finance and Operations Jeff Addante decided that something had to be done to shake the company out of its economic malaise.

"We wanted to create a permanent solution, one that would give us consistent growth and staff stability - we needed to change our model," Miller said.

The first step was to hire an expert manager. In August 1996, DependiCare recruited Carmen Davies, reimbursement manager with former national chain Homedco.

"We knew that we had to get a leader who was as strong as possible - someone who could work toward a long-term solution," Miller said. "Carmen was that person - she'd been there."

Once Davies was on board and studied the company's financial woes, she suggested something Miller said he thought was highly unorthodox at the time: creating a separate billing center and locating it in near Rockford, Ill., where she had recently moved. But he overcame his initial reservations after weighing all the potential merits of the idea.

"At first I was afraid that moving the billing center out of sight would mean a loss of control - something I wasn't used to," he said. "What finally convinced me to do it was the notion that a stand-alone center would create a focus on billing."

After leasing a facility and hiring the staff, Davies'work was just beginning. One thing she noticed right off the bat was a problem with billing fundamentals.

"They would bill, but they didn't collect," she said. "They spent a great deal of time on document review. You're supposed to have documentation before you even make the claim. So we started with clean documentation and worked backwards."

It took a little patience to get the billing center working at a level where cash flow consistency improved, but after a year it gained a lot of momentum, Addante said. In fact, cash flow loosened up so much that it boosted the company's growth rate from 20% to 30% annually.

"The reduction in DSOs to 59 days equates to $2 million in cash flow," Addante said. "The cost of billing as a percentage of revenues went down by 2%. This reduction drops to the bottom line. We wouldn't have had the cash otherwise."

With freed-up cash available, DependiCare was able to acquire three small companies. And because of stability in what Addante calls "human resource and capabilities," the billing center has been able to take on more volume - to the point of offering contracted billing services to other HMEs.

Even with the dramatic turnaround, Davies says, billing challenges still exist and that she and her staff must be constantly vigilant about new trends on the horizon. She cited e-CMNs and HIPAA security regulations as two examples. Locally, the Illinois Department of Public Aid, which administers the Medicaid program, is experiencing a funding shortfall and providers must somehow adapt.

"There's always a new problem area," she said. "But my staff has been well trained and they are very knowledgeable about the latest payment trends."

In retrospect, locating the billing center in the Rockford area has worked out even better than originally planned, Miller said - especially in terms of the labor force.

"The worker population there is different than here in Chicago," he said. "Instead of the 20-somethings who bop from job to job, we have working moms who are more willing to commit to us for the long term. They see it more as a career." HME