Sutter Case Analysis

An increasing issue within the health care field is the inability to collect debt from the growing population of uninsured or underinsured patients. Healthcare organizations may be struggling to meet operational margins because the industry has never treated its customers like other retail-oriented sectors of the economy. A McKinsy and Company report states that hospitals incur sixty billion dollars in bad debt annually because they typically collect only ten to twenty percent of a total uninsured patient balance after service. (MacKenzie, 2009) This is due to a number of reasons, including poor accounting practices or a lack of patient information. This paper will discuss how one hospital, California’s Sutter Health, has taken steps to correct this issue. It will analyze the accounting practices put into place by Sutter Health and the success of this practice. This author will also provide an alternate solution to the issue of debt collection for self-pay patients as well as an opinion concerning the actions taken by Sutter Health.
First it is important to provide background information pertaining to California’s Sutter Health Hospitals. Sutter Health is a non-profit network of community-based healthcare providers. This organization provides care to more than one hundred Northern California communities. (Souza & McCarty, 2007) Sutter Health is composed of hospitals, physician organizations and other health care service providers that share resources and expertise to advance health care quality. While the variety of providers is beneficial to the communities served, it posed an operating issue for the organization. (Hummel, 2004)
One of the key problems that Sutter Health was experiencing was that each facility acted as an independent “island” of information. Due to the numerous operating and accounting systems it was impossible to obtain data and reports in the same format from every location. There were no common practices within the organization. (Hummel,

References: Anonymous. (2005, October 19). Sutter Health Selects EPSi 's Solutions to Achieve System-wide Cost Standards and Performance Management [electronic version] Retrieved July 29, 2010, from ProQuest Database (Document ID: 913887581). Anonymous. (2010, June 05). MedAssets; Sutter Health Selects MedAssets Patient Bill Estimation Solution to Improve Collections and Help Consumers Understand Their Out-of-pocket Cost Boehler, A. & Hansal, J. (2006, January 01). Innovative strategies for self-pay segmentation [electronic version] Edmonds, T., Olds, P., McNair, F., & Tsay, B. (2010). Survey of Accounting (2nd ed.). New York: McGraw-Hill Irwin. Healthcare Financial Management Association (HFMA). (2010). Managing the Self-Pay Cycle. Retrieved July 29, 2010, from http://www.emdeon.com/eNewsletters/Compass/Spring10/Managing%20the%20Self%20Pay%20Cycle%20HFM%20March%202010.pdf. Hummel, J. (2004). Financial Finesse [electronic version]. Health Management Technology, 25(2), 52-55 Koeing, S. (2010, March 29). Five Strategies for Strategic Debt Recovery of Self-Pay Patient Accounts MacKenzie, S. (2009, November 6). Upfront collections: A hospital’s lifeline [electronic Version] Souza, M. & McCarty, B. (2007). From bottom to top: How one provider retooled its collections [electronic version] 28, 2010, from ProQuest Database.