(Crain's) — Illinois Attorney General Lisa Madigan is starting to look into allegations that Chicago-based Accretive Health Inc. has engaged in aggressive bill-collecting tactics for hospital clients.
Accretive's stock price plunged about 42 percent Wednesday on the New York Stock Exchange, closing at $10.75. But the stock was up 9.6 percent in early trading Thursday.
The company, which collects bills and manages patient revenue for hospitals, in 2010 created "boiler-room-style sales atmospheres" among employees at Fairview Health Services, a Minneapolis-based system of 10 hospitals, Minnesota Attorney General Lori Swanson said Tuesday.
To collect co-payments and outstanding bills, the company urged workers in some cases to demand payment before care was provided and in other cases tried to collect money at patients' bedsides, according to a report by the Minnesota attorney general's office. It also implemented in-house competitions and rewards for meeting collections goals.
"I have every reason to believe that what they are doing in Minnesota is simply company practice," Ms. Swanson said, according to the New York Times.
The six-volume report Minnesota released Tuesday alleges civil violations of state and federal debt collection regulations, laws governing nonprofits and patient-privacy protections. The Minnesota attorney general's office sued Accretive in January, alleging the company violated debt collection laws, and the company a month later signed a consent decree agreeing to stop further collection efforts in Minnesota, the report states.
Ms. Madigan intends to get more details about the allegations from her Minnesota counterpart, a spokeswoman said.
"We have not received any complaints regarding Accretive Health, but we are looking into (the company) and reaching out to the Minnesota attorney general's office," the spokeswoman said in an email.
The allegations could be a blemish on the rapidly growing firm, which was co-founded in 2003 by CEO Mary Tolan and two private-equity firms. The firm works with health care providers to reduce costs and increase collection of revenue, which sometimes puts it in the role of bill collector.
Accretive's net services revenue climbed 35 percent, to $826 million, in 2011, from $606 million in 2010. Profit shot up 131 percent, to $29 million, from $12.6 million in the prior year.
Fairview has ended its "revenue cycle work" with Accretive, a spokesman for the hospital system said.
Accretive said last month in a filing with the U.S. Securities and Exchange Commission that it was amending its agreement with Fairview to transfer "revenue cycle operations" to the health system's management. The change will mean a loss of $62 million to $68 million in revenue, about 6 percent of the company's projected revenue for 2012. The company is scheduled to release first-quarter earnings on May 9.
A spokeswoman for Accretive did not immediately respond to messages for comment.