Health care's administrative back end — services like verifying patients' insurance, putting patients on payment plans and collecting patient debt — is bigger than ever.
The big picture: The U.S.' fractured insurance system leads hospitals and doctors to spend tens of billions of dollars annually on billing software and services — none of which are tied to actual health care.
Driving the news: For-profit hospital system Tenet Healthcare decided to spin off its billing services unit, Conifer, into its own publicly traded entity in 2021.
Between the lines: Conifer and hundreds of other companies sell their administrative services at a profitable rate. And many hospital systems that send out the bills have ownership stakes in these companies.
- Tenet controls 76% of Conifer, which registered $1.5 billion of revenue last year. Catholic Health Initiatives owns the remaining 24%. They both use Conifer.
- Catholic health system Ascension and private equity firm TowerBrook hold a majority stake in R1 RCM, which used to be named Accretive Health and was prohibited from doing business in Minnesota due to its aggressive collections practices. Two Ascension executives sit on R1's board.
- Bon Secours Mercy Health recently sold off a majority stake in its billing firm, Ensemble Health Partners, for $1.2 billion, the Wall Street Journal reported.
The bottom line: Researchers have cited administrative costs as a sizable source of health care waste. Some startups are trying to address this issue, but traditional billing and service firms are only getting larger and have providers as investors.
