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Pennsylvania Medical Society
20 Erford Road
Lemoyne, PA 17043-0301
Re: Billing on behalf of physicians.
From the time, some medical societies have operated delinquent bill collection agencies for their members, and some societies have operated primary billing system. As I understand it, success has been only moderate, and there are a number of pros and cons of such activities when conducted by medical societies. I think however it is time to take another look at this matter since it is possible that we have not been thinking in large enough terms.
The reason this has come to any attention is that I was recently visited by a sales representative of Automated Medical Systems Incorporated, who happened to have an office two blocks from my own, and who were merely soliciting another customer. As I was listening to their sales pitch, a rather striking proposal emerged. They offer, for 8% of the total collection, complaint and inquiry process. If you remember that the cost of the third party system is 10% on the payors side, and if you include the errors in payment, as well as the interest cost of the float, you see that the administrative use of the third party payment mechanism for physicians charges now coming to 750 million dollars a year in the State of Pennsylvania.
Since even 1% of that astronomical figure would be a very welcome increase in the revenues of PMS, the idea of getting into this arena simply will not go away. Furthermore, the Society has a financial incentive which no other bill collection agency has: we would consider it a success if we reduced the errors and the interest cost on the float. In that sense, getting into this business would create a financial incentive to the Council on Medical Economics to pursue more vigorously its goal of "getting appropriate reimbursement, fast and efficiently for physicians, through the third party payors."
The mechanism which I would have in mind is to offer to enter into a joint venture with Automated Medical Systems, as well as making the same offer to any other such company, particularly in Pittsburgh, Harrisburg and Scranton. The mutual advantages are obvious: we get the advantage of their expertise and track records, and they get the advantage of our endorsement to increase business. While I would certainly want us to maintain an arms-length relationship, there is the additional advantage of the information which would be coming to us, which we could use to pressure the third-party payors into simplifying the payment stream.
If you think about it, this is a role we have always aspired to, but we have neither had the money nor the expertise which money can buy to cope with the very large bureaucratic payor organizations with which physicians are now wrestling.
This letter is written to you because you probably have more experience than anyone in the practicalities of this proposal, and I would certainly welcome your ideas in the ways in which this concept might be modified to make it both more workable a more politically acceptable.
George Ross Fisher, M.D.